A lot of small tech companies grow their business with the sole intention of selling out or licensing to larger companies, like Google, facebook and Twitter. These giants and many other tech companies buy the intellectual property owned by smaller companies to add and enhance what they already offer. This makes absolute sense. Why re-invent (IP) if it's already been created? Service professionals can use the same principle by ...
Licensing in proven information systems; for example:
A lot of time you may need your own product and marketing materials. However, sometimes you may need IP, systems or information you can’t create. In those cases it’s worth exploring potential licensing opportunities.
Research what’s already on the market that might be an excellent fit for your business. You might end up with several options and in some cases you will be licensing the product creator’s brand too. A well-known brand will give you brand recognition, which is an added bonus when selling the product.
Then next stage is to approach the owners of products you are interested in licensing. Unfortunately, there probably won’t be a notice on the website saying; “Contact us for details how to license this product” or similar wording.
That’s not necessarily a problem because the product owner probably hasn’t considered licensing. Find out from the company who owns the product or is likely to be responsible for making a decision on licensing. It’s likely to be the marketing or managing director. Contact them by their preferred means and ask them if they would consider licensing their product to you and take it from there.
Licensing a product that is already on the market greatly minimises the risk of creating it yourself. It also eliminates product development time and costs.
Also, a proven product with a good sales or performance record means you can focus all your time on duplication, sales and marketing. The licensor should offer support in these areas because they want you to be successful. Details of marketing and product support should be specified in the licensing agreement.
By licensing in intellectual property, you have instant products to sell in your area of expertise. Also, by licensing rights to products in addition to your own increases the value of your business and makes it more attractive to potential buyers and investors.
Instead of spending time and money on product development, consider licensing in products to grow your business and revenue quickly!
You must ask the licensor important questions before signing any agreement and consult with a solicitor who specialises in IP and licensing. Some questions you should ask might be…
You need to find out exactly what parts of the intellectual property are included in the product license so you know what you can use (e.g. images) and what you can’t. Then you can make an informed decision to establish if there is enough important IP in the product license for you to make the product a commercial success.
Also, what does the licensor expect of you the licensee? Are there minimum sales targets he expects you to meet? If so, what are the time scales? Are there royalties to pay and if so how often?
If you don’t have absolute clarity on all aspects of the license, what’s included, IP limitations, support offered, royalty payments etc it could cost you dearly in time and money. At first glance it might seem like a good deal but if there are too many limitations in the license or financial demands on you, the product might not be commercially viable.
Licensing in products can be a great strategy but you need to know all the facts before committing yourself to a signed agreement.
If you are a service professional you can build your business quickly by licensing out your IP to bigger companies too. Perhaps for reasons of development time, marketing budget or specialised expertise you weren’t able to finish developing your product or market it effectively.
If that’s the case, look for larger companies that would be a good fit for your product and are likely to have the resources to finish it (if necessary) and market it successfully. They might already have effective distribution systems and databases to reach your ideal clients with much greater market exposure.
It would be far too time consuming and expensive for you to create a similar distribution system from scratch. Therefore it makes absolute sense to license the intellectual property for your product to businesses that can take it to market quickly and pay you well for the privilege!
If you have a successful product that you would to license out to other suitable companies then it’s a good idea to have the following notice either with the product or on the product webpage…
“This product is available for licensing. Contact us for further information”
If you do license your IP to a larger business it doesn’t mean you have to lose all rights to develop your IP further and take it into different markets. You have every right to specify your own development, marketing and branding requirements within the terms of the licensing agreement.
For example; you can keep your own branding but allow your licensing partner to brand it under their own company name and market it in different demographic and geographic areas.
It’s also important not to license your IP too early because it may not have been developed sufficiently to attract businesses or gain the best royalties or financial return. Ideally wait until the product is fully proven and tested with sales or orders. The more you can prove that your IP is a financially sound investment the stronger your negotiating position will be when it comes to negotiating percentages and royalties.
When appropriate, seriously consider licensing in IP and products that enable you to grow your product portfolio, thereby eliminating product development risk, time and costs. Licensing is a good way to gain the rights to new products quickly which subsequently means more sales and profits.
If you are struggling to get your product to market or simply want to find other licensing partners with a bigger reach and marketing potential, then consider licensing out your IP. This gives you additional revenue without the hassle of production and marketing costs but the flexibility to still market it under your own brand if you want to.
All products ready for licensing can have a free listing on this website. If you need any help with getting your product ready for licensing and marketing it, please don't hesitate to get in touch using our contact page.