5 Reasons You Should Consider Licensing a New Product

Is this the first time you’ve considered licensing a product? There are plenty of instances when a licensing relationship makes sense. Here are five benefits a licensing arrangement may offer you and your company.

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#1 - Market Expansion

Licensing allows the entrance to new markets without investing heavily in technical support, marketing, and other resources. A licensing relationship can allow a business to reach a broader audience and tap into new customer bases.

#2 - Expertise and Resources

A licensing arrangement may offer specific knowledge and capabilities that the business does not have access to or may not be able to assemble, including awareness of local markets, production best practices, established distribution networks, and more.

#3 - Risk Mitigation

Licensing allows a business to share the risks associated with product development, manufacturing, and market entry, which reduces financial and operational risks, particularly in unfamiliar markets or industries.

#4 - Speed to Market

A product's entry into the market can be expedited significantly by licensing. Instead of spending time and resources building a presence from scratch, a business can quickly launch and promote a product, leveraging its existing brand recognition, production capabilities, and relationships.

#5 - Peer Support

Opportunities for information sharing between licensees are often readily available within licensing arrangements. Chances are good a peer has overcome a challenge or taken advantage of an opportunity a licensee may be encountering.

Licensing isn’t for everyone. Countless small businesses continue to succeed without the benefits of offering a licensed product. If your company (or its revenue) is just the right size for you or you’re not comfortable abiding by rigorous quality control requirements, a licensing arrangement may not be right for you.