If you have a great idea for a product or service but no idea how to make it a reality, licensing your brilliant idea to companies with more resources, experience and connections could be the easiest and most profitable way to get your dream product on the shelves. Many businesses are beginning to recognize that great ideas are not always the result of giant think tanks or test groups; they can come from anyone. The corporate shift toward open innovation is making it easier than ever to present ideas to influential companies. All you need is a good idea and a lot of determination.

What Is Licensing?

Simply put, licensing is the renting of an idea. If a company sees the benefit and believes an idea will be successful, it will agree to license it. Sometimes licensed ideas are simply improvements to already-existing products. The terms and conditions are negotiable and often vary greatly from one product to another. It is important to not undervalue your idea but also be realistic and not ask for too much. The company pays royalties for the right to use an idea, so the more successful the idea, the more money earned by both parties.

Why Let Someone Else Profit From Your Great Idea?

By licensing your ideas to companies, you are letting the resources and experience of a company do the heavy lifting of the project. Unlike with a traditional startup, you do not have to raise capital, find a manufacturer or meet with retail stores. This is all done by the company using your idea, allowing you the freedom to get back to doing what you are best at, idea formation.

By collaborating with businesses, you are also building valuable relationships and learning from experienced people in the field. Pitching an idea takes very little of an investment. What is in it for the company? Licensing ideas lowers its research and development costs. You have already done the hard part; you came up with a groundbreaking idea. Now let the pros handle the dirty work while you dream up the next big idea.

Protect Your Idea With a Patent

Before making any contact with a company regarding your idea, be sure to legally protect it by filing a provisional patent application with the U.S. Patent and Trademark Office (USPTO). The fee is relatively inexpensive, and ideas are protected for 12 months, during which time the product is legally referred to as “patent pending.”

Prepare a Presentation

The next step is to come up with a presentation that convinces the decision-makers of the company that your idea solves a problem. A good idea sells itself, so it does not need to be too elaborate. However, be creative and focus on the benefits of your solution. If possible, present a mock-up product, a video or conceptual drawings to help the company see your vision.

Get on the Phone

Then, all there is left to do is pick up the phone and set up as many meetings as possible. Remember, the company is looking to poke holes in your idea and identify any possible risks. Your job is to make the decision as easy as possible by thinking through your idea and presentation critically to anticipate the company's possible concerns and come up with credible solutions.

Be Persistent

Being an entrepreneur is not easy. Chances are, the first company you meet with will not be interested. It may not see your vision, or maybe you will not present your idea clearly enough. No matter what the reason, if you believe in your idea, learn from every setback and never give up.

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