Why Licensing is Better and Faster than Starting a Business

Starting your business around your IP takes time, money and resources. Plus you must also get the necessary experience, whether it’s marketing, sales, distribution or production.  And that can lead to unforeseen problems that cost more than you originally planned.

This is part 5 in our series on licensing leverage. In this article, I’ll cover why licensing is often the best route, especially if you don’t have the manufacturing experience or resources to carry a new product to market yourself. It’s less risky for you because the licensee assumes all business risks.

Licensing an established company let’s you “leverage” the people in your partners company with the right experience to get your IP into the market. Plus their experience means they are more likely to succeed with your IP because they know what works and the best way to get your IP into the market.

Licensing is one of the fastest ways to reach the commercial market. It’s considerably faster than starting and building a new business which typically takes about 18 months to 2 years.  Licensing is done in a much shorter time frame, often months instead of years.

Licensing offers a quick and powerful method for tapping into a partner who is already operating a business producing and selling goods or services into one or more markets. Whether it is electronics, toys, T-shirts, or hats, there are companies already in the market and you can “plug into” these partners through licensing.

That’s why licensing is such an ideal strategy. It’s the process that’s used around the world to get rights for new innovative IP. It lets you strike while the iron is hot, and take advantage of the growing demand for innovation.

Take the pharmaceutical industry. They used to invest tens of millions in decades in research and development of new drugs. But their internal R&D is too expensive and too slow – especially for a rapidly shifting and more competitive marketplace. It’s faster, cheaper and better to source IP through licensing. This strategy lets them get new products into the market faster by focusing on their strengths – production, marketing and distribution.

Whether you license a small or large company, you’ll leverage their experience in the development and marketing of products and services. They’re also experienced with the time and effort required to get your IP to market. And most importantly, licensing a company who’s got the know-how and resources to produce and sell your product gets it into the market in less time, then trying to do it yourself.

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