Normally the subject of licensing wouldn’t come in a Bootstrapping context since there usually is an up-front cash payment along with a guarantee related to securing a license. These two factors could be substantial using a high visibility license, for example, Mickey Mouse, NFL football, Nike, Armani, etc. However, I bring it up here for two reasons:
In the early stages of one’s business, a fantastic license offers advantages as well as potential pitfalls. Early knowledge of the how-tos of licensing can assist you in identifying license opportunities and ways to exploit them. I believe there are several niche licenses in the early stages of your respective company where no cash up-front is essential plus your only payments are royalties (a Variable Expense). One example of this is in our second year within the watch business (A mature industry with many large companies).
We secured this wristwatch license for that Wizard of Oz and Gone with the Wind. We paid no up-front monies, just a royalty on shipments. It was a not-in-demand license; there was good marketing experience with other industries; first and foremost, our plan to sell to a distinct segment market (Direct Response Companies and Collectibles) was appreciated. We were successful and gained needed credibility in the new field for us. This led us to eventually secure licenses for Elvis Presley, the NFL, NASCAR, Precious Moments, and others. Our concentration on untapped watch markets and our unique watches powered our success.
Here can be a short tutorial about the licensing industry.
First, Licensing is the process whereby one company uses the trademark, property, or brand name of one other company in substitution for some type of compensation. In most cases, the licensor grants the licensee some sort of exclusivity-perhaps geographical, perhaps by-product, perhaps by distribution channel. Most often, …