Here you stand with your prototyped, patent pending, commercially viable invention in hand. You come to a fork in the road where you must make a major decision about how your product will end up on store shelves.

Welcome to the eighth part of our 10-part series, where you answer the question of: a) whether to license your invention to someone and let them do all the work, or b) whether you build a business around your product and manufacture it yourself.

These are two very different paths, which will require different skills and places to spend your energy. Overall, about half of inventors try to license, and the other half make it themselves. Let’s talk about the two paths from which you must choose one.

Option 1: Licensing
This route is usually considered the “easier” way to invent. You license your invention to a company, they do the manufacturing, and they ship it to the US, the put it on the store shelves while you sit back and watch the party.

True, once you license an invention, the process is easier. However, finding someone that will license the invention is the incredibly tough part. You need to work your butt off convincing some large company that consumers need your invention and that this company is the right one to give it to the consumers.

Typically these companies want to see proof that consumers want your product. This is where all the market research you’ve done along the way comes in handy.

Sometimes they want to see sales, which mean you will need to manufacture a small run and test your product at a store.

Sometimes the company wants to check with retailers to make sure retailers will put your product on the shelf.

Sometimes you can or can’t license to a specific industry. Lisa Lloyd, inventor of “The French Twister,” had great success licensing to the hair care industry.

Once you do license, then the company takes over. They do the manufacturing, they run the business, hire the people, deal with the IRS, etc. You don’t get paid typically until your product has sales.

Inventors are paid what’s called a royalty, usually around 3-6% of net sales of the product. So if your product sells big, you get fat checks in the mail. If it doesn’t, then both you and the company invested lots of time and money in a failed product. If you’ve done your market research, you’ll be more confident of how well your invention will sell.

You can find more out about licensing through Lisa’s “How to Invent” audio course (Members Only) or through her regular blog posts.

Option 2: Manufacture Yourself
Doing it yourself will likely require you to build a business around your invention. That means you will need to learn or hire so you can act like a business. Think CPA’s, attorneys, administrative staff, marketing & sales personnel, webmasters, and the list goes on. If you take it one step at a time, you’ll be able to follow the American dream of being your own boss.

If you choose this route, here are the steps you’ll be taking in the future:

• finding manufacturers (speak Chinese?) and ensuring quality control
• hiring shipping/logistics companies to bring the manufactured product to the US
• distributing and storing the product in the US
• trucking your product to the retailer’s warehouse
• convincing retailers to stock your product - marketing & sales staff
• advertising your product to consumers
• transforming yourself from an inventor, into a businessman

Find out what other inventors think about manufacturing.

Conclusion
You must make the decision which route to go, based on your abilities, your product’s industry, and the potential of your product. Here is a quick recap of pros & cons.

Licensing Pros - don’t have to build a business and worry about all the related stuff
Licensing Cons - difficult to convince manufacturers to license, less control over direction of product, less money in your pocket

Manufacture Pros - get a larger chunk of sales, the joy of running a business, retain control over product, doing it yourself
Manufacture Cons - requires a longer-term commitment, requires more investment (time, money, etc.) from your end, need to change mindset from inventor to business person

Hopefully that gives you a bit of insight. I highly recommend you get familiar with both paths before deciding. That’s where our discussion forum and inventor education section come in handy.

Next we’ll talk more about marketing your invention yourself.

To Be Continued…

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