Many things about inventing seem to be Gordian knots.
So, let’s keep it a bit simpler in this blog post: there are two paths to success as an inventor:
- Build a business around your product
- License your product and collect a royalty based on sales
Building a Business Around Your Product
The entrepreneur with a dream and a vision cobbles together limited resources, works long hours and days, risks all they hold dear; and, in the end achieves the American dream of business success and financial independence. Right? Sure. This romantic narrative frames the imagination of every inventor – but like the Potemkin Village of yore, it is a facade that covers an unpleasant reality.
The unpleasant reality is that building a business around a new inventive product is an extremely risky enterprise. If you are skilled at manufacturing, packaging, product pricing, acquiring loan capital and talented employees, have the marketing mojo to persuade retailers, and are willing to work long hours you may achieve success with your product.
Assuming you have the above skills, you may build an extremely successful business around your product(s) as Lori Greiner, Joy Mangano, James Dyson and others have done before you. But unless or until you sell your business, you are unlikely to be skiing in the Swiss Alps, going on walk-about in Australia (which I have done) or, for that matter attending your children’s basketball games. You will be chained to the helm of your all-consuming business enterprise. You may become a millionaire, but at great personal sacrifice.
Licensing Your Product
Rather than building a business around your business; where the reins of your business, as well as all of the responsibilities and liabilities belong to you, you could choose to license your product to a large company. When you license your intellectual property, your patent, someone else takes on all those responsibilities in exchange for paying you a small royalty percentage every time your product sells.
The licensing path has its own tradeoffs. When you license to a manufacturer, you are metaphorically handing them the keys to your car (your product).
They will have a different vision for your product than you do. They may omit some of your favorite bells and whistles, they may use cheaper materials, packaging will be different, so will pricing from your vision. Your product will become their product.
But, they can manufacture the product in very large quantities and quickly place it on store shelves all over the US, driving a potentially enormous sales volume. A tiny royalty paid on an enormous sales volume may be a very lucrative income for you. You probably won’t become a millionaire, but could have a very nice lifestyle.
In the process, you gain something more precious than money: freedom to use your time as you like.
Freed from going to work every day, you can use your time to work on other products, travel to Machu Picchu, or just be a cheering parent at your son’s soccer game or your daughter’s volleyball game. Spending time with those whom you love is the most precious commodity of all.