CHOICES

Manufacturing your own new idea is a lot easier if you are already in a manufacturing business. Diversification within your own industry is more achievable than starting from scratch. When you’re starting out there are premises to secure, employees and contractors to put in place, as well as a range of overheads including insurance, workers compensation, and establishing a supplier and distribution network.

Some smaller operators rely on outsourcing. This means you, the IP owner, contracts one or more businesses to make your product. Here you need contracts to ensure your IP rights are not infringed or confidentiality is not breached.

Licensing is another way to make your new idea happen. The type of licence you should choose depends on the amount of involvement you want your new “partners” eg the manufacturer or distributor, to have in the commercialisation of your idea. The type of licence may be limited in terms of exclusivity, length of time, territory and purpose etc. Talk to your legal adviser about the best licensing option for your new idea.

Assignment is basically selling your IP outright to another party. Why would you do this? You may have thought about going into business with your new idea and realised that you don’t have the business skills or the desire to manufacture or develop the product yourself. You may also want to sell your IP to fund your next big idea. Whatever your reasons, seek advice on the contract of sale and value of your IP.

Franchising your idea could also be an option. Franchising requires extensive work in developing the business systems for others to sell your product or service properly. We’ll talk more about the pros and cons of franchising in Chapter 3.

Final Points

What you choose to do with your new idea will depend on your personal and financial circumstances and your need for external advice. Clearly, there are many areas where a lack of knowledge and good advice could prove costly.