5 Best Ways to Successfully Selling an Idea to A Company – A Complete Guide

Last updated on September 21st, 2024 at 10:28 am

 

Whether you’re an entrepreneur or not, understanding the concept of selling an idea to a company is worth your time. I don’t know about you but many people are not certain about what tomorrow shall bring.

And knowing how to sell an idea to a company with a diversified mind isn’t meant for a special type of people anybody can do it if he or she is passionate.

Though, you have to start from somewhere hence you need to know how to sell your business ideas to a company before reaching a point of inventing an idea that can make an impact.

Everything that you see is a shadow cast by something that you don’t see.

All the big businesses and organizations in the world started as an idea in the process to what you can see now as of importance with value.

What Is a Patent?

It’s where an invention is protected under law and the inventor is legally given exclusive rights to ownership of the concept.

Getting a patent can cost you up to $10,000 in case you can’t do the application process yourself. Yes, it’s that costly when lawyers start it all out for you from scratch offering expert advice.

Asking why patent costs differ, right? Patents are different in nature hence processing varies leading to price differences. That’s why if you’re not conversant with how to sell your idea it’s then better to consult an expert for the best.

 Is It Possible to Sell an Idea Without a Patent?

In most cases, patenting is done before selling an idea to a company or enterprise. However, patenting is done on an invention that was established from an idea but not patenting the idea alone.

As said before, with a patent you legally acquire exclusive ownership in selling a particular idea. And here, if anyone is found duplicating or illegally using your invention without permission can be sued.

But in case you want to sell an idea without a patent, it’s also possible. Patenting is quite complex in terms of costs and time hence skipping it to work things out fast is also an option.

Let’s now walk through the different ways how to sell ideas to companies without patenting.

• Networking

This is put first on the list since it’s one of the most cost-effective strategies. And all you have to do is connect with businesses and inventors on different occasions to expose your idea.

It’s a process that gets you closer to people that might be in need of your invention without patenting so that you get paid. Meet people and businesses to let them know about your invention idea and how it can be of importance to them in the best way possible.

• Licensing The Idea

When you license the invention idea, you can sell it without completely patenting it. License the invention to an enterprise in search of money-making ideas such that you can get paid for your effort.

This way you take a share of the business’s profits made using your invention. And another option that you can use is making pitches but it requires skills and competence.

But if discussing an idea isn’t your style possibly distributing hard and soft copy information to sell your invention is an option too. Focus on companies and enterprises that are most likely to be potential partners in business.

• Make Direct Sales

Here you make sales directly to consumers through online platforms that offer support. You don’t need to patent an idea but you can work under online support with submission companies to sell an idea.

Submission companies are service providers that provide support to enable you to make sales using online platforms or equip you with best practices that work. And the services offered are at a cost in case you want assistance in selling your invention.

Though there are different platforms to work with, it’s better to connect with one that can offer the best after making research.

There’re lots of benefits in registering with a submission company since they offer a variety of services that can enable you successfully make a sale.

Some services to take advantage of our publications, graphic illustrations, and more. You get to know where to sell the idea without much hustle since most of the groundwork is done for you.

It’s today’s trend, so long as you know how to take advantage of online platforms it’s also possible to sell a business idea without patenting with convenience.

How To Pitch an Idea to a Company with Best Practice?

If you feel it’s the right time to get started pitching your idea with confidence but uncertain about any legal proceedings really, it’s a process.

Surely, you need to do things correctly when selling an invention idea to a company in order to succeed. Now here are the different ways how to pitch an idea to a company and get paid with best practices

1. Collect Data and Information About the Invention Idea

If you want to sell ideas for money, you need to come up with fully researched ideas in order to thoroughly get the best out of them. And selling an idea can be done after you’ve done some groundwork say legal work, market analysis, and production.

• Market Analysis

You need to understand the market in relation to the invention idea in place. Try out the invention among your immediate friends to get their views about it for the start.

Where you find inventions related to yours make comparisons such that you can deliver the best in the industry.

• Legal Work

Get to know where your invention stands when it comes to legal practice. It will be a wasted effort to come up with an idea that won’t be patented under the law.

Before going any further there’re online platforms that can be used to check whether an invention can be patented.

After you can then get fully decided whether to proceed with an idea or not depending on the outcomes. So, take your time to look through any legal proceedings connected to the business idea you intend to sell.

• Production

Target businesses are interested in the technical design of the invention idea that you’re trying to sell out. You then have to ensure that you’re certain about the production concept and its requirements.

2. Formulate A Qualified Demonstration

When data and information are collected effectively it would then be wise to get it to the attention of potential targets whether an investor or government.

However, information should contain a three-dimensional prototype model and a polished simple sell sheet covering the information collected. You need not complicate a sell sheet hence ensure that it’s precise and concise with features such as;

• A formal document where you state the reason for reaching out to the licensee with concise self-identification.
• Problems, challenges, and how the invention is a solution
• Features and benefits of the invention
• The market for the product
• The legal position of the invention in terms of patenting and copyright

3. Identify Prospective Target Companies

Having formulated a demonstration plan then you’ve to look out for those businesses that are fit for the invention idea in place.

But it’s better to consider only prospective targets that you may even list down to make a follow up say 25 to 35 of them. Yes, it’s advantageous to try out different companies because you can’t determine which one will buy the idea.

Selecting potential businesses to reach out to maybe somehow challenging, right? Do a survey around to recognize companies in a similar line of business.

If possible, check out umbrella associations under which companies operate in producing products that connect with your product idea.

Through umbrella associations, there’s access to variety and exposure and you use less time in doing the search.

Also using online platforms is another way you can access different companies in your interest without much struggle. Such platforms avail databases that are information-rich including companies that could be your target.

4. Qualify Target Companies

There’re qualities that you need to consider in order in order to qualify target companies. And these depend on the nature of your product idea in relation to targets in the industry.

Prospective licensees need to have the following qualities in place:

• Same Line of Business

The invention idea should be a solution to the company’s challenges in the same line of business. It also shouldn’t be competing with the target in order to make business sense though has to be viable.

• Company Policy

You need to know whether in company policy when it comes to making submissions it’s inventor friendly. This is done to ensure a healthy working environment in putting the idea to work.

• Geographical Location

Target companies need to be nearby for ease of accessibility and convenience in case of anything to be worked. Sometimes working with companies in different locations diversifies opportunities but compared to local companies it’s not more of a winning strategy.

• Company Size

You need to work with organizations that can be easily recognized and with activity in the industry. Though large companies are more viable but also growing businesses present better opportunities.

In fact, you’re less burdened in terms of bureaucracy working with growing businesses.

5. Make A Sale

At this point, you’re well-equipped with the necessary information in different ways. You then have to know whether there’s a high probability of getting business with your invention idea.

And in coming up with a licensing agreement the terms and conditions should be fair. The agreement should be flexible in order to favor both parties where there’s a need in simple terms.

Though, what fails some people is setting unrealistic expectations from the invention idea. Some want to get highly paid without doing enough of what it takes to get huge payouts.

Here’re some of the different terms used in licensing an agreement and how they apply to the invention idea with best practices.

• Royalties

Whenever the licensee makes product sales, by right the licensor is entitled to a share percentage of the sales made. In most cases, a royalty ranges between 2% to 5%, and this is gotten on each unit sold at wholesale price.

Ensure approval of the invention idea to minimize the risk of loss on the side of the company as this may also positively result in high royalty payouts. A royalty is surely vital and it’s what the agreement is meant to enforce in practice.

• Annual Minimum

Here the licensee is meant to pay a licensor a minimum amount of royalties regardless of actual royalties due from sales.

You must put in the work as a manufacturer such that you can make sales to cover royalty costs to the licensor. To some licensors, the annual minimum is much considered in the first year of business.

This is meant to ensure that the manufacturer gives the invention idea attention and hence finds ways to make sales.

• Up-Front Payment

Licensors get paid an amount of money upfront on the assignment of rights. The payment comes before activity or making sales in the industry.

Depending on who you’ve partnered with, upfront costs are unpredictable among companies. Since patent filing is costly most inventors want to cover costs that were incurred in patenting.

• Exclusivity

In this case, companies would want to acquire exclusive rights in distributing the product of the invention idea across borders.

But this can only be worked out when both parties in business come to an agreement after discussions and the outcomes determine the way forward.

Challenges Faced in Selling an Idea to A Company

There are lots of challenges that entrepreneurs face in the process of coming up with a business idea at the time of starting up.

• Requires Plenty of Time

Developing an idea that can make an impact from a business perspective takes a while. If you’re the type that wants things to work out pretty fast then this isn’t for you.

You’ve to put in the work for quite sometime before the product idea shapes up to the desired state. Tangible product ideas require a demonstration of the manufacturing process of the invention.

Therefore, you have to take your time to come up with an idea that’s tested to the fullest for the best results.

• Investing Before Selling

There’s no way you’re going to sell an idea without investing in it. And investing involves money and other intangible proven resources that add value which then differentiates gambling and investing in the long run.

Potential business ideas must be protected though it costs money to inventors. If it’s not protected then there are possibilities that large companies can duplicate your idea without your consent.

Though investing in an idea is costly but it’s worth it despite the challenges involved.

• Legally Owning the Idea Requires Some Effort

In order to effectively sell an idea, you need to legally own it. Though, to some people, it’s a limiting factor due to the complexity of legal know-how.

So, selling an idea you must have legal ownership of which it’s advantageous hence you’re protected. And patenting is the best way to do it whereby you’re required to produce a prototype that incorporates the invention idea.

However, if you’re not ready to go legal then you won’t be able to make a sale to get paid.

• Businesses Might Have Already Tried the Invention Idea

All businesses are trying their level best to ensure that they can offer the best to keep in business. And this brings us to the point that they make a lot of research to find better ideas that can help them grow.

That’s why you need to make thorough research such that you don’t end up in wasted effort with an idea that was already tested.

Therefore, research on the idea you want to go about should be done in the first place as this defines whether to push it further or not.

What About a Non-Disclosure Agreement (NDA)?

It’s a legally binding contract that furthermore protects an entrepreneur of all confidential information as well as intellectual property say invention ideas of competitors. Violation of Non-Disclosure Agreements has negative implications.

In most cases when the other party is fine with signing the agreement don’t hesitate to present the papers to get protection. Though at some point you may get challenges despite the agreement, it’s worth it compared to nothing at all.

Some established businesses don’t want to get into signing Non-Disclosure Agreements in case they’re already benefiting from the idea. Yes, they fear the legal implications associated with getting into an agreement with an inventor.

As an inventor, in case you don’t take into account key legal clauses in the Non-Disclosure Agreement you’re most likely to lose out to other players. But also, is your invention worth signing in the eyes of the potential business partner?

Some investors will be ready to sign the agreement whereas most others won’t sign it due to its legal consequences.

Summary Of Selling an Idea to A Company Successfully.

To be successful with how to Sell a product idea to a company isn’t that easy that’s why it’s important to brand yourself with an expert image. Yes, start small and then grow big but where you intend to sell the idea to big companies working as an entity gives you an edge.

Well-established businesses prefer working with corporate entities to individuals, I guess you get the idea? As an entrepreneur when you register your business consider renting professional space with expert service providers to create a good image for the business.

Pitching an Idea to a Company with Best Practice

• Collect Data and Information About the Invention Idea
• Formulate A Qualified Demonstration
• Identify Prospective Target Companies
• Qualify Target Companies
• Make A Sale