Do you have a great idea for a product? If the answer is “Yes,” you have probably asked yourself the next logical question: How do I make money? That next step may seem daunting: Do you want to build a new company from the ground up in order to market and sell the product, or do you sign a product licensing deal with a pre-existing company that already has the resources to get your product out into the market ASAP?

If you choose the latter and you’re successful in getting your product licensed, you’ll receive royalties on sales of the product, and you’ll have a lot more time on your hands to tend to other activities. However, getting a company to license your product is far from simple. Less than 10% of products find a company willing to enter a license agreement.

With that in mind, consider the following 7 tips to turn your dream into a reality via product licensing:
1. Business Planning 101: Thoroughly analyze the market, know the competition and understand how your product is different and meets a marketplace need. Credibility is everything/ Potential licensees want to see a realistic analysis of risks the licensee will have to deal with-e.g. product failure, potential for slower-than-expected customer adoption. Cover your bases with market research data, competitive analysis information, patent status and extent of coverage. Provide a letter from your patent attorney summarizing the initial search results and any other pertinent opinions relating to the extent and value of the patent coverage awarded.
2. Protect Your Product. Corporations usually have intellectual property departments specifically set up to handle and manage product licensing opportunities. Most will not accept submissions of a licensing opportunity for which a patent has not yet been issued. And many will not sign a confidentiality agreement and/or will require that only their own agreement be signed.
3. Know Your Legal Rights. Work with an attorney that specializes in intellectual property when submitting an idea to a potential licensee to ensure the idea is adequately protected. Never sign a confidentiality agreement without first having an attorney review it. And never turn over materials to a company without your attorney giving you the green light. It may be dangerous unless you have adequate patent protection in place or a confidentiality agreement that your attorney deems sufficient to protect your intellectual property.
4. Don’t Reinvent the Wheel. Follow the established licensee rules for submitting your idea for consideration. If the licensee has a licensing department start there, ask for their established rules for submission and follow them to the letter. Any wavering form the established protocol can waste a lot of time and effort to correct the misstep and lead to a lost opportunity.
5. Find a Friend. Once you have clearance from the company to present your idea, always try to find a champion from within the company who is excited about your idea and works to “push” the idea into the company rather than you simply attempting to “pitch” the idea onto the company.
6. “No” Never Means NO! It’s always safer for the company to say no to an idea than it is to say yes. The key is to be able to overcome the objections the company throws your way. It’s imperative that instead of hanging up or walking away in defeat, you ask to understand specifically why? If someone says no to you, that’s a perfect opportunity to learn. You’ll use what you learn to create an emphatic yes next time around.
7. Shop Around. As the old saying goes, “Don’t put all your eggs in one basket.” Relying on a single potential licensee just adds more inherent risk to a challenged marketplace. Approach many potential licensees to increase your odds for success. Further, playing multiple bidders off of each other can actually put some well-needed leverage on your side of the negotiating table. Ultimately, if you generate serious interest-and your aim is to license your invention to just one licensee-be sure you know when to stop playing competitors against each and start building good faith with them for the long run.