So, you came up with a great idea for a new product. Following my advice, you put together an attractive sell sheet and filed a provisional patent application that has value to establish perceived ownership. You began reaching out to companies to see if they're interested in licensing it from you. And you're getting in! You're submitting your ideas.
But something's not quite right.
You're getting rejected left and right.
When you're an inventor licensing ideas, you're basically in the rejection game. It's not easy, but you have to learn why your product ideas are getting rejected. You have to step back, look at the choices you've made, and ask yourself: Have I done everything correctly?
inventRight, the company I cofounded with Andrew Krauss, has been helping people license their ideas for new products since 1999. It's very rare for a company to immediately respond, "We like this just as it is!" Redesign is typically needed, which is why it's so important that you find out what's off.
Here are 14 common reasons why companies reject product ideas for licensing.
1. Your sell sheet is not selling for you. It doesn't communicate clearly. Your benefit does not stand out. It takes people too much time to understand what your product is. This is extremely common. Many inventors try to do this themselves, but they're not marketers. They need expert help.
Pro-tip: When you've completed what you think is a good sell sheet, show it to a friend and see what type of questions they ask. If they don't get it, you should start over.
2. You are submitting your idea to the wrong companies. This, in my opinion, is the most commonly made mistake. Your idea might be great, but if the company you're pitching to sells something different, it's not a good fit.
Pro-tip: Study product lines very carefully. Look at the type of products the company currently sells, including price point, material, and packaging. Make sure your product fits in their line. Don't show them something they don't currently participate in selling.
3. The industry is not inventor friendly. Not every company has embraced open innovation, meaning working with inventors. Some large companies, for example, still require patent protection. Industries that are dominated by two to three large players are inherently challenging.
Pro-tip: Reach out to companies that have licensed ideas from inventors before. Go after midsize companies. They're hungry for new ideas. And find industries where there are lots of companies manufacturing similar ideas.
4. There are too many similar products. When a field is crowded with similar products, that's a lot of competition.
Pro tip: In this scenario, you can still succeed, but your product must have a big point of difference -- like a wow factor -- to stand out.
5. You missed the sales cycle. In most industries, there's a rhythm to each year. New products are developed at certain times. Depending on the industry, you might have to wait as long as twelve months for your submission to be reviewed if you miss the right window.
Pro-tip: Find out when the company exhibits at trade shows. Then work backwards nine months. That way, if they like your idea, they have enough time to debut it at the next show. You can also, "When is the best time to submit?"
6. You over-designed the product. In some industries, it's extremely important that you consider the retail price of similar products. If you add too many bells and whistles, your final product could be priced out of the required range. That's a problem.
Pro-tip: Try redesigning your invention to be simpler. You could have a contract manufacturer in the United States sign a non-disclosure agreement and get a quote. Knowing how to produce your concept affordably and at the right point will greatly help you.
7. Patents. Some companies want to be able to file intellectual property. If there are too many prior patents and your product doesn't have a point of difference as far as that landscape is concerned, your submission might be rejected.
Pro-tip: Teach yourself how to search for prior art. The United States Patent and Trademark Office has created many resources to help you. Filing a well-written provisional patent application will give you perceived ownership.
8. You're already selling online. Sometimes, selling your product online without a great sales record can hurt your chances of a licensing deal.
Pro-tip: If you're going to sell your product online first, make sure to keep a good track record of your sales data and testimonials because they could come in handy. If you're semi-successful, that takes away risk.
9. Your product requires new manufacturing equipment. You have created something that cannot be manufactured using standard equipment. Maybe your idea is that new. Having to spend money to develop manufacturing equipment is very risky.
Pro-tip: Start with simple ideas. Make small variations to existing products that are already being manufactured.
10. You're being unreasonable. Companies want to work with people who are helpful, courteous, and professional. If you're sending too many emails and asking too many questions -- basically, being a pain -- they will avoid you at all costs.
Be patient, be helpful, and do not argue. Ask for feedback. Act like a team player.
11. They don't have the resources. Maybe it's a startup or just too small of a company. Established companies that are midsized are looking for new ideas to get ahead.
12. You're only contacting the big boys. Every inventor wants to license his or her idea to a market leader. Seriously: These companies are not that innovative. They buy innovation! They let smaller companies prove there's a market for a particular idea first. Then they dive in. It's fine to reach out to your favorite companies. But be practical. They don't need your help as much as other companies do.
13. Their open innovation process doesn't work very well. There are many companies that want to look at good ideas, but don't have a department or specific person who is responsible for reviewing submissions and making decisions.
I recommend identifying companies that have licensed ideas before. If they get back to you quickly and are easy to work with, that's a good sign.
14. They just launched a similar product. Meaning, they invested their time and money. Your timing just isn't quite right. Simply put they have too much invested to take on something similar.
Pro-tip: Look towards the future when you make improvements. If a product does well, you can bet it's going to come out the next year with a slight improvement. Design that next improvement!
Getting rejected is just part of the game. After licensing my ideas for many years, I must remind you that it's always a numbers game.
My advice: Build relationships with the companies that reject you. Try to determine why your idea was rejected so you can redesign. Some companies will tell you, but others you will need to ask. Use your creativity and return with improvements! Don't get defensive. Don't try to argue your point of view. Rejection is key to understanding how to design a better product.