How to pitch your idea to a company?
If you have a great idea you want to get into the marketplace, there are many directions you can go. If you are a businessperson with an entrepreneurial spirit, launching your own startup will give you the most profit, but you will use 100% of your time and resources in this venture.
If you want to maintain a work/life balance but still make money from your idea, you could license it to a large corporation and earn a royalty on each sale. The questions here are: How do you approach companies? How do you offer your idea? How do you pitch your idea? We’ll provide answers here.
Research! Research! Research!
We cannot stress enough the importance of information. The more you know and learn about you, your capabilities, your product, your market, the demographics, your target audience, and your competition, the more of a competitive advantage you will have.
Test your product and the market
Give out samples, test, and get feedback from the people who receive the product. Don’t just rely on your close friends and family, as they will likely have a biased opinion. Ask strangers, someone from the same industry, or a random person from work. Check out similar products and learn from what is already out there. For example, find out where these products are manufactured and their retail prices.
Protection is key
Look into the possibility of protecting your idea. Some companies will not even consider your invention if you don’t have a patent on it. Talk to a professional company with the experience to tell you whether your idea is even patentable.
Where will you manufacture your product?
Will it be local or will you manufacture abroad? Do you know the materials and processes required to manufacture your product? Understanding your idea from a manufacturing standpoint will help you immensely during this process.
In order to pitch your product idea to companies or people, you need to showcase it right! You need a functioning prototype and a sell sheet or presentation, or both. Some companies will give you the opportunity to present, so it’s best to have a detailed presentation ready. To share basic information about your product, you need a sell sheet. A sell sheet is a one- or two-page document that summarizes your idea, its purpose, and its benefits. It should have the core features, an outline of what the product is for, and pricing (if you have it). It should also include your purpose when pitching; for example, are you looking into selling the patent, seeking a royalty agreement, a private label, or selling the product to the company?
This document should be simple and clean. It should have clear images and a concise message. If you are not presenting personally, make sure you include a letter that tells the company a bit about you and your intentions.
Who? Now who will you present to? Create a list of potential targets, from larger companies and manufacturers to retail stores. Include anyone that might carry, sell, or be interested in your product. Research whether they have a product development department. Find out if they allow open innovation submissions. Some companies have an entire department of people just looking for new innovations to invest in and may have websites where you can send your idea. If the companies are closed to submissions, try finding a product development or marketing manager, as companies would potentially listen to them. Don’t be discouraged if you are not successful in reaching out to the right people. Keep trying!
If you can, send samples out to people that didn’t listen and approach them in a different way. Be creative when approaching companies–you have to try to stand out from the rest.
If you manage to get a company interested in your idea, make sure you have a team of experts helping you throughout the negotiation. Find a commercial lawyer to work on the details of your agreement with the company. There are multiple potential options: you can either sell your patent, get a lump sum amount plus a royalty agreement, or a royalty agreement only with no up-front payment. The company may also require exclusive rights to manufacture, distribute, or sell the product. They might even be interested in just buying the product from you. It is critical that these details be written correctly in the agreement between you and the company.