Teaming with someone already in the industry often makes sense
Inventors often form alliances or partnerships with sales reps because they don’t have established contacts in the industry, or they need a partner to help foot the bill.
BY DON DEBELAK
They say two heads are better than one. So if you are trying to license your idea, why not get a partner?
Often, the best partner is a sales representative who is already in the industry. He or she will know the market, many of the major players, and what kind of deal makes sense.
For inventors, this partnership doesn’t mean you have to give an equal share to your cohort. Often, a 10 percent to 15 percent share is enough if you have a “works like, looks like” prototype and a marketing plan.
You might have to increase the sales rep’s share if you need money that he/she contributes or helps raise, but typically you will pay a modest amount to the rep for all the value offered. Besides just licensing an idea straight up, the rep can help you take other steps that might be important to land a licensing deal.
An example is a partnership with a manufacturer who will help design the new product, build prototypes and eventually produce the product. This can be a key tool if you are licensing to a company that outsources production and if your product is too expensive for you to produce on your own.
Inventors often form alliances or partnerships with sales reps because they don’t have established contacts in the industry, or they need a partner to help foot the bill. Most inventors think they just need an idea or patent to get a license—and in some cases, that works—but the seven suggestions below detail some of the additional steps an inventor can take to improve his or her chances of landing a license and landing a higher royalty. Sales reps can help with all these steps.
It’s not just the rep’s contacts that help you. You also receive a major boost with everyone you talk to when they realize you have an industry professional backing your idea.
Points when partnering
- Have a patent or patent pending. The inventor typically does this.
- Find an engineer or designer to complete design work on the invention. A sales rep typically knows industry people with the right expertise to do this, and often knows contacts who might work for a percentage of the idea.
- Find a manufacturer to make the prototype and possibly set up a small production run. Again, the rep may know people who can do the job, and might do it for a share of the product rather than an upfront fee.
- Set up a sales test at a key retailer or end user to get market feedback. Reps have contacts for a wide variety of market tests.
- Get conditional purchase agreements from manufacturer sales rep agencies, other marketers, retail chains or other key target customers to prove the product is viable.
- Arrange for the product to be shown at a trade show to get market feedback, and show potential licensors that the product has a good chance of creating strong sales.
- Line up other industry people as investors or supporters of the idea.