Licensing Your Invention vs. Going Into Business

Have an idea but not sure what to do with it? Our expert explains which money-making option is right for you.

During the invention process you’ll encounter an early fork in the road: should you go into business for yourself, or should you try to license your idea to an already established company or manufacturer? There are many factors to consider when making this decision, and this column will help you evaluate the pros and cons of each.

First it’s important to understand these two options. When you go into business yourself, you’ll handle every step of the process–from creating a working prototype to overseeing the manufacturing to devising a marketing plan to sales to distribution. When you license your invention, most of these steps are taken on by the licensee and you’re paid a royalty on net sales of the completed invention. Running your own business demands a greater commitment and tolerance for risk with the promise of greater rewards, while licensing your idea minimizes your risk, and also your financial return.

As you consider your decision to go into to business vs. licensing your idea, there are three main factors to consider:

By Tamara Monosoff

Full Story: http://www.entrepreneur.com/article/0,4621,324953,00.html