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17th Feb | 2015

Running Your Own Business Vs. Licensing Your Product

Not every new inventor wants to run their own business.  If you aren’t a salesperson and don’t have a lot of time to spend on your idea you might want to consider licensing your product.  Once your idea is protected, you can present it to a licensee (a company that will manufacturer your product and pay you a royalty.) You are basically renting your idea to another company. Companies are looking for new, innovative ideas.  Yes, some have R&D departments but their employees can’t continue to churn out new product ideas.  They need to rely on innovation outside their workplace that can keep them ahead of their competition.  If you have a novel idea that they love, they will work with you to pay you a percentage of the wholesale cost they receive.

Licensing can save you time and money.  It is also an easier way to get your product on the shelves of the larger retailers.  Big box stores want to work with vendors that already have several SKUs on their shelves.  Your goal is to find a licensee that is already in the store that you think would fit your product.

If you are a Shark Tank fan like I am you might be familiar with the product, GrooveBook.  Look where they are now as a result of a licensing deal.  !http://www.forbes.com/sites/amitchowdhry/2014/11/18/shutterfly-acquires-groovebook/

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