Jim DeBetta
jimdebetta
|
Should I license my product or make it and sell it myself? My quick take on the subject….
This is one of the most common questions I hear from inventors and entrepreneurs and the answer is simply NOT simple….
First of all, you must understand that no matter what, embarking on either path takes knowledge and time and you must be committed to seeing your project through. People often call me and tell me they want to license their idea and think it is easy and a quick way to making a lot of money. I shut them right down and tell them that getting a product licensed is almost always much more than what it appears. It is not just calling a few big companies like Proctor & Gamble and telling them about your idea and then they put a big fat licensing deal in front of you. In fact, these companies reject most everything they see. They have to. They have access to an endless supply of inventors and thinkers who approach them with ideas and the fact is they can only choose a few things that they can get behind and bring to market. They have budgets too and constraints internally and just cannot take on everything they like.
It is true that there are a handful of very savvy and talented people that can convince and negotiate with big companies to get a licensing deal done. However, these people know what to do and how to do it. They understand that in order to be considered for a licensing opportunity, they must have a compelling product that can be patented and at a price that is compelling to them and the consumer – among other important factors. These people know what the licensee wants and needs and prepares their presentation to suit the company’s needs. They also clearly understand that they may get a lot of “no” before they get a maybe or a yes. It is not an easy path to take but certainly can be rewarding if you can prove to a company that your product has all the right stuff! The key is to learn everything you can about what path you want to pursue so that you are fully informed about what to expect and how to move forward.
For those of us that like to develop products and manufacture them ourselves, this path is traditionally much tougher and more time consuming and requires much more of a financial commitment – but the rewards can be much greater. It is still a difficult but reachable dream but no matter what you wish to do please realize that good old fashion hard word and determination are some of the basic foundational components you will need to succeed.
|
Posting replies has been disabled
|
Gladys Hernandez
gladyshernandez
10,000
Insider Points
|
Hi Jim,
Your information is very helpfull. My question to you is this. Does an innovation have to be patented before it can be licensed?
Thank you again
Gladys
|
Roger Brown
rogerbrown
∞
Insider Points
|
Jim, fantastic insight. I couldn’t agree with you more. Gladys, to answer your question , no, it does not need to be patented, but you do need to make sure you have all your ducks in a row before you go to any company. As Jim stated above we may make it sound simple sometimes when say we got a license two weeks after the company looked at our idea. The thing is you don’t see al lthe behind the scenes prep work we did before contacting the company. I am a risk taker, but I do more of what I would call “informed risk” verus “blind risk”.
Informed risk is where you have done your homework, researched your product market, researched your target companies, are prepared to answer any questions on your product, have information to back up your claims and keep good records. Blind risk is where you get an idea, immediately file for a patent while throwing money at it without seeing what is on the market, love your idea no matter what opinion is given, slap something together on paperand believe people who see your idea will get it with or without a proper description, think everyone who turns you down are to stupid to see a great idea when it is right in front of them.
Jim will agree that we spend more time researching our target market and getting solid contacts long before we send out any material to prospective companies. We want to get it right the first time so we don’t waste the comanies time or our own. It also saves you a lot of money in the long run.
http://www.rogerbrown.net
|
Ron Komorowski
rjlinnovations
|
I will say this about the subject, taking in the assumption that the inventor did some smart inventing and invented something simple as a first one or two inventions. It is very easy to have a 100% failure rate licensing. Unfortunately, I think that is the case for most inventions.
You can have a 100% success rate manufacturing an invention yourself. You don’t have to have blockbuster volumes to be successful! Selling 1000 pieces may be a BIG success for you!!!! I know inventors who have ordered 1000 pieces or so from China and maybe they will sell out by attending a few fairs or big flea markets. That is VERY rewarding you know!
You WILL sell some of your product if you manufacture it. Surely someone out there will buy it if you think it is a good idea. Companies may not see your vision at the very beginning. They usually don’t actually……and they only want the big obvious, rare blockbuster to license unless you choose a very small company, and then the profits may be very small and short lived.
AGAIN…it is NOT just licensing or manufacturing yourself ONLY. You can create a combo deal of both typical deals. Any deal under the sun can be created.
One thing you don’t want to do though, a very common mistake, you don’t want to GENERALLY invent something that needs $500,000 or more to prototype or fully research and develop unless you are VERY VERY knowledgable in that field and have a career in it. Lots of luck getting a company to spend 1/2 mil just to get your idea into a production model prototype.
Something that big they will trust their in house product development team because they are considered the “experts” and might be worth that kind of risk.
I have friends that invented things that cost too much to get started and have got nowhere because of it.
This is why I chose SIMPLE inventions to go with that I could make a working prototype myself and a production model prototype for 10, 20 or 30 thousand tops.
Ron Komorowski
Inventor of Handi-Straps
www.handi-straps.com
|
adam clifford
abacus
|
That’s really great information,Jim,Roger and Ron.Ultra-clear.
I had a thought on this too,whcih was that because of the costs of taking an idea to market,the fall-out of wrong decisions economically and career-wise,companies really are heavily biased to taking on clear[as far as that can be judged]winners.
But that leaves a large scope for product ideas,which may not be ‘block busters’[how many products are used on an everyday basis ,are not block-busters,but will be bought serially as they wear out?-opportunities for better products if they can be produced at a competitive price.]
If,as Ron says,you can produce a good product idea[maybe not a block-buster-so what] and sell it whatever way,Boy,that sounds alright to me.
|
David Cramer
davidkcramer
50,000
Insider Points
|
I started out w/ the goal to license an idea 14 yrs ago. I have found that most bigger companies won’t even talk to you unless you are at least “patent pending”
After a big company held my prototype and viewed my first patented product(a hand tool) for 9 months and then backed out when I pushed them for a committment; I was compelled to produce it myself for fear they were going to do an end run around my patent. I started w/ a small run- 200 pcs. What an education just trying to get American companies(!) to make the various parts I would later assemble. (I opted to outsource and assemble as an easier way to mfg.)It took 1-1/2 yrs to track down sources for all my components. It was exhilerating to finally assemble them. I went to an industry trade show and gave away more than I sold, got some great feed back, set up a web site and have sold them in every corner of the country. I advertised at $500/mo in the leading industry trade magazine. and had to stop after a yr, because my total of 10 sales couldn’t support my overhead:(
It was painful to sink approx $60K into that product and not get a to see it pay off, but if I look at it as paying for my education, it was a great investment.
It turns out it was a great spring board to my current project which involves manufacturing have much more mainstream appeal. We recently did a launch/ market study at the county fair and had an overwhelming response w/about $60K in sales already in the first month!
I was able to develop strategic relationships the first time around that helped me immeasurably this time. My “education” helped me to learn about timing, better assessing needs of the average American family, getting people on board that love doing the things I hate, listening to the wisdom of a business team I’m now part of, etc.
Unless you are raised in a family that already does this for a living, I see no other way but to jump in! Like Jim and Roger said do your homework, reduce it to a calculated risk, start simple and go for it.
One last thing- the initial product line for our alternative energy products company is not patented. We have made some improvements on old technology in a way that makes our stuff much more attractive to avg folks. You don’t always have to have a patent to be successful. Who knows I may someday be able to retool my patented product and get that to take off too.
The main thing is you need a “long haul” perspective.
|
dond invents
dond
287,750
Insider Points
|
Thanks David for sharing a little about your $60K “education”. Glad to hear you were able to profit from it later, though it must of been sad to realize at the time that folks were not interested in your patented product that you spent so much effort to bring to the market. Best of luck with your new venture.
|
David Cramer
davidkcramer
50,000
Insider Points
|
Thanks Dond!
I think the market will eventually embrace my original idea. I think I was a little ahead of the curve on the timing. Marketing and packaging refinement will definitely help me.
|
Jim DeBetta
jimdebetta
|
Good for you David! What I love is that you recognize that you do not need a patent to have a success. I never filed a patent and had great success with a line of products that added up to nearly 100 items!! I always feel there is a place for patents (if you plan to license, have real unique technology, and other reasons) but you absolutely do not need them to go to market and ultimately make as much as you want.
I love your story…and keep at it!!
Jim
|
Roger Brown
rogerbrown
∞
Insider Points
|
David, it is great to see someone else that understands you can get to market without a patent and massive amounts of money. Although you had a costly lesson you have bounced back and are on your way. There are plenty of Inventors that don’t learn and continue to throw money at a product and end up bankrupt or severely in debt. I have two kitchen utensils coming out in 2010 that I have less than $60 invested combined. As you stated doing your homwork up front definitely puts you in a calucated risk position versus a blind risk position.
David, do you have any links to your products?
http://www.rogerbrown.net
|
Ron Komorowski
rjlinnovations
|
David…nice story! Good for you! So many here….sorry for saying it but it is the truth, will wait for someone else to pick up the ball for them and no one ever will in most cases, AND they have their eyes on the biggest of goals like the biggest companies and retailers which is the HARDEST to land!!!
I have always wanted to hit the local fairs and flea markets but the flea markets you have to get up at 4 AM on the weekend to get a table. That is like torture to me!….but I should tough it out like you did.
THE REASON why I am successful is because like you, I took shots at BOTH the top AND bottom levels. I tried for coverage in the largest magazines and TV spots and got both yet I will still leave a little card/brochure on a counter at a store or try and stick a poster up in a store somewhere.
I’ll try just as hard to convince one construction worker as a whole big company.
What happens is, you get some success from the top and the bottom and then it sort of “magnifies” when it “collides” in the middle…it all enhances to make it something BIG. For instance. My hustling it up with local EMTs got me on the cover of the biggest safety magazine! The strides at the lower end help your “big shots” at the top eventually…you need both like you did David…but most keep going for that shot at the top or blow.
Ron Komorowski
Inventor of Handi-Straps
www.handi-straps.com
|
David Cramer
davidkcramer
50,000
Insider Points
|
Hey guys,
Thanks for input and encouragement.
Ron- I like the top and bottom approach. Reminds me about what we learned about forest fires in forestry school. (As separate fires coverge, the energy is exponiated and it changes every thing around it even creates its own weather…everything is then engulfed by the ensuing conflagration) That is a powerful picture of what we want our marketing strategy to do for us.( I’m going to stick that one on my bulletin board!)
Roger- My tool site is: www.arcmastertools.com, The alternative energy one is: www.zoeenergy.com
|
Tammy Boggs
tmboggs3518
|
Hello,
This is my first time posting. I’m trying to find the answer to my question but there are so many forums to read through. So if anyone could help me I would greatly appreciate it. If my husband and I decide to make my little invention out of our garage and try and sell them at swap meets, flea markets, online, craft fairs, or holiday bizzars can I still obtain a patent later? Right now at this point in our life we absolutely can not afford to even try to get a patent. I know if we do so I have no protection and I’m taking a risk. I would just like to really be making some money now on my idea until, if ever, a company decides to license it.
Thanks,
Tammy :-)
|
Margaret Pryor
mger80
213,250
Insider Points
|
Tammy,
Once you start sellng it, you only have one year to file for patent protection. Otherwise, it will not be eligible for a patent.
|
alice InWonderland
aaagrace
|
Tammy, have you thought of filling a provisional application? It’s a lot less expensive to file and it will give you some protection. You have a year after that before you have to file a non-provisional patent. Also if you ever want to patent your idea, make sure you are keeping a written record with witnesses signitures that shows that you invented it and how you came up with the idea.
Good luck with your idea!
|
Scott Thieman
pegman
|
Tammy,
From the outside looking in, to take on manufacturing out of the garage and selling as you describe a simple product seems like a very easy thing to do and going for the patent at a later time.
Trust me, it isn’t!
There are a lot of things that go into it, a lot more than you can imagine. You will not even believe how much until you experience it for yourself. I was exactly in the same boat 3 years ago, but I did have a background in manufacturing and personal finacing since no bank in their right mind will finance an inventor.
I am about to sell my house because of the business expenses have wiped me out. I devoted all my time to the business and remodelling when things got slow. I also “Knew” this would take off some day. Any how, marketing, theft, deceipt, no income, poor understanding of accounting and taxes, tooling, packaging, office start up expenses, travel, misunderstanding of markup through the chain, etc etc etc
I’m trying to give you a feel of what I experienced, this path is filled with challenges. Your love and devotion to your husband will be tested. Best of luck, and please, to spend a few days or even weeks setting up a business plan would be wise… very wise.
|
Tammy Boggs
tmboggs3518
|
Thanks for the info. gals/guys. My only problem is I don’t think I’m smart enough to file a provisional application. Everything on the USPTO web site is Greek to me. So I guess I just need to figure it out. Like the good Lord said my people perish for lack of knowledge. It would be great if I could find a professional here locally that doesn’t charge a lot to file the paperwork for me. This is all a new ball game for me. So I better start learning the curves or I’m going to strike out. :-)
Margaret – Bye the way the idea I’m talking about is one that I just recently got an R8 in for the Christmas Tree Shops LPS. It was my very 1st submission and on one hand I’m glad it went as far as R8 but on the other I’m bummed it didn’t get picked. I guess I’m taking it pretty hard. Just trying to figure out what to do now. :-(
|
