Licensing your Product
If you’re working a day job and don’t want to start a business, you can still take advantage of your great product idea by licensing the product to another company that has the entire infrastructure in place to properly manufacture, market and sell the product .
Upside
- Lower risk because you can work on your product part-time.
- Lower cost because your main expense is production of a prototype and testing the product to make it attractive to potential licensees (rather than the cost involved in setting up an entire business to make, market and sell the product).
- Freedom to move on to the next big business idea - if you do successfully license your product idea, you could receive royalties long after you’ve stopped working on the product!
Downside
- Finding the right licensee takes tenacity and determination, and can take a long time – don’t quit your day job!
- Unless your product gets sold in a significant enough volume by the company to which you license it, the amount of royalties you receive can be low or non-existent.
- It’s extremely difficult to get through the door of big companies to start a negotiation. That’s partly why less than 3% of all patented ideas actually make it to market through licensing agreements.
Multi-level Marketing
Multi-level marketing (MLM) is a marketing and distribution structure. People at the top sell to those below them, who in turn sell to those below them. The higher up you are in this structure, the more money you can make. The challenge with MLM businesses is that people at the top are frequently the winners. The vast majority of people at the bottom end up spending money and time to get involved and end up losing whatever they put in.
If you're determined to choose a business with an MLM model, be sure to check with at least a handful of other people who've entered at your level (who you identify on your own, separate from people the MLM promoter refers you to), and see what they have to say. Find out their perspectives on how - and if it’s possible - to be successful.
Upside
- Typically, limited startup costs (a membership or initial inventory commitment).
- Viable home-based business.
- You are provided pre-packaged tools, products and sales techniques.
Downside
- Most people lose money in MLM activities, because they can’t sell the product as effectively as they thought they could.
- Credibility can become an issue, especially if you start treating friends like they’re customers.
In this model, you don’t have foot traffic in your business, only . You to consumers or to other businesses.