A common mistake inventors make is not casting a wide enough net when it comes to identifying companies that will want to license their product idea. Like I always say, licensing is a numbers game. You only need one company to succeed! But you actually have to reach that company for that to happen.
These days, I push my students to create a list of 30 companies to call. Yes, 30. The more potential licensees you come up with, the greater your chances of success are. It’s that simple. My attitude is that within reason, you should call everyone. Why not? If you’re not sure if a company is a good fit for your product idea, find out. It won’t take you that much time. You’ve already done the work; what’s getting in to one more company? I’d rather my students call companies that end up turning them down than inadvertently pass up an opportunity.
Of course, some companies on your list are going to be a better fit than others. Call the companies on your list that you think are the most likely to want to license your idea last. By that point, you’ll have some experience under your belt. You’ll realize how easy this is to do. Your technique will be smooth and polished.
Before you begin brainstorming your list of potential licensees, think about where you envision your product being sold. Do you see it being sold in brick and mortar stores? Online? In catalogues? On television? Don’t limit yourself to one distribution channel. Don’t limit yourself by geography either. Inventors often think of only the brick and mortar retailers that are familiar to them. Different retailers exist in different parts of the country!
So, what are some good ways of identifying potential licensees?
1. Google. I used to recommend visiting retail stores in person, but that’s no longer necessary. Everything is being sold online. Of course, you can and should visit stores in person to examine the products being sold there. Find the aisle where your product idea would be sold. What companies are producing these products? These are your potential licensees. You can use the Internet in the same way.
2. Wikipedia. If you Wikipedia a specific industry, there are often lists of retailers included at the end of articles.
3. Trade associations. Check out the websites of trade associations that are relevant to your industry. If a trade association doesn’t maintain a list of retailers online, call it and ask, “Do you have a list of all major retailers in this business?”
Another mistake inventors make is getting too specific. For example, if you have an idea for a new kind of ice cube tray, you should hunt for companies that are making kitchen accessories out of plastic, as well as companies that make ice cube trays. Include companies whose product lines complement your idea-if the products they are manufacturing are made out of the same material as yours-on your list.
Making a list of potential licensees is a form of studying the market. As you’re creating your list, take note of the marketing copy you read. What language does the industry use to describe its products? Later on, you should incorporate similar language into your sell sheet. After all, this is the lingo your potential licensees are familiar with. It will resonate with them. In the same vein, observe how products are being packaged. Are certain colors popular? How are the products being styled?
Populate your list with the company’s name, any telephone numbers you come across, a link to its webpage, a link to where its products are sold, and any observations.
I want to note that not all companies treat inventors like they should, unfortunately. One of the best ways of protecting yourself is by looking into any companies you are planning on submitting an idea to. As you’re creating your hit list, Google each company’s name and the words “lawsuits” and “complaints”. What do you find? What are other product developers saying? Do any red flags come up? In my experience, companies develop a reputation pretty quickly. If they’re unfriendly to inventors, you’ll find out about it.
At the end of the day, you shouldn’t obsess over creating the perfect list. It’s not the best use of your time. You need to start making some calls to get in!
Originally published on Inc.com September 18th 2015.
