Should You License Or Self-manufacure Your Invention?

Each option has its advantages and challenges, and the right choice depends on your resources, expertise, and vision for your idea’s future. Let's look at both strategies:

Licensing Your Invention: A Path to Passive Income?

If you’re more interested in focusing on new ideas than running a business, licensing could be ideal. When you license your invention, you grant another company the right to produce, market, and sell it in exchange for royalties or other compensation. This option can be appealing for inventors looking to leverage the resources of established players while minimising their own financial and operational risks.

Why License?

• Lower financial risk: Producing and marketing a product can be expensive. Licensing lets you avoid those costs, as your licensee will handle production and distribution.
• Fast market entry: Licensees often have established networks, allowing your invention to reach the market faster than if you were starting from scratch.
• Focus on innovation: Licensing frees you up to concentrate on creating more inventions, leaving the logistical challenges to someone else.

However…

• Less control over quality: Once you hand over the rights, you may have limited say in how your invention is produced or branded, which could impact its quality or perception in the market.
• Potential for lower profits: While licensing can provide a steady income stream, it may not be as lucrative as managing the production and sales yourself.

Producing Your Invention: Going All In

If you envision building a brand or want complete control over your invention, then producing it yourself might be worth the extra work. You’ll oversee the entire process, from manufacturing to marketing, giving you control but also requiring substantial investment.

Why self-manufacture?

• Full creative control: Producing yourself means you decide on everything, from product quality to branding and marketing strategies.
• Higher profit potential: While success is not guaranteed, producing and selling your invention could bring greater financial returns if it gains traction.
• Brand building: Producing your invention yourself helps you create a recognisable brand if you want to establish a presence and build customer loyalty around it.

Challenges to Keep in Mind

• Significant investment: Setting up manufacturing and distribution channels is costly and can strain your resources.
• Operational complexity: Managing production, supply chains, and customer support requires expertise and time.
• Market uncertainty: Launching your own product means assuming the risks of market fluctuations and competition.

Licensing vs. Producing: Why Not Both?

Sometimes, the best path isn’t choosing between licensing and production but using both approaches at different stages of your journey. James Dyson’s story is a perfect example. Dyson initially licensed his vacuum technology in Singapore, which allowed him to generate the capital he needed to fund his factory later in the UK. This phased approach allowed Dyson to get his product to market quickly without the massive upfront manufacturing costs while still eventually fulfilling his dream of producing under his brand.

Once Dyson’s technology had proven its worth, he used the profits and market validation from the licensing deal to build his manufacturing facility, which helped him launch the Dyson brand as we know it today.