Let's say you come up with a great idea, but you don't have the knowledge or the money to bring it to market. You could benefit from it financially, at the outset and throughout the product's lifecycle, by licensing it to a company who can make your idea come true. It can be a time-consuming process, but finding a company that can do what is necessary to launch your idea into the marketplace can be rewarding, both financially and personally.
Do your homework. Gather as much information as possible about the market you see your idea serving. If necessary, do focus groups or send a mail survey to gather further insights into the age and the income of those people who might be attracted to your product. In addition, you'll need to know if your product is patentable and if there are any legal issues the prospective buyer will have to deal with. Finally, know the market and if products similar to yours are there, as well as what it might take for a manufacturer to make your product.
Prepare your presentation. The most powerful evidence of your idea's worth is a prototype. Most of your money must go into its development so that it will be impressive enough for someone to invest in it. In addition, you should prepare a document for your potential investors that sets out the problem that your idea solves, its benefits and the features, the market or markets you see it penetrating, and the legal status of your idea, whether it be a simple copyright or a patent.
Zero in on those companies that might entertain a presentation about your product. Ideal prospects might be companies whose product line is missing yours because you can demonstrate where your product can complete their set. Go online and research trade associations that fit, because they will yield a number of prospects to contact. Finally, visit stores that carry products like yours, and note the names of their manufacturers.
Narrow down your prospect list to the most likely candidates, paying attention to their size, the products they sell and the difficulty you see in finding someone who can make a decision.
Be prepared to negotiate with a company that agrees to manufacture and distribute your product. Go for an up-front fee to offset the cost of obtaining a patent and other costs associated with finding someone to do the work. In many cases, an inventor can expect to receive a royalty from 2 to 4 percent, depending on the size of the up-front fee.
Bill Herrfeldt specializes in finance, sports and the needs of retiring people, and has been published in the national edition of "Erickson Tribune," the "Washington Post" and the "Arizona Republic." He graduated from the University of Louisville.