When to Stop Pitching?
Even After Getting the Go-Ahead from One Company, Be Ready for Potential Curveballs by April Mitchell
“WE LOVE IT and want to move forward with it.”
These are the words every inventor wants to hear! This is what we work toward and why we do what we do. But I have learned it is just as important what we do after hearing these words.
It may be tempting to assume everything is going to work out and that we should cease pitching our product because we think it has found a home. If only it were that easy.
5 possible obstacles
The hard truth is that it is long from being a done deal when we are told a company wants to license our product. There are many things to consider before taking your concept out of the pitching arena. I have been in some tough situations where I thought I had done deals, but they weren’t because that dotted line was not signed. Even then, until the product is for retail, things can still fall through—but that story is for another day.
Even when a company is “working on the contract” or “running things through legal” or “finalizing manufacturing costs,” anything can happen. When these things happen, inventors must choose whether to keep pitching the concept or pull it off the market.
Some things to consider before you stop pitching your concept to “other” companies because one company said it wants it:
- Company licensing procedures. Depending
on the size of the company and its legal procedures, receiving the licensing contract can still be weeks away. And after receiving the contract, there is often some back-and-forth before the contract is finalized and signed. This can take a couple weeks or even more.
- Change of priorities. A company’s priorities can change in a drop of a hat—and without notice to the inventor. It can love your product, but because of something completely out of your control the company may decide it cannot take it on right now. You might not get the courtesy of being told right away (yes, this has happened to me). When you find yourself in this situation, if you are not already pitching to other companies it would be a good idea to resume.
- Established relationships. These are important and can be very helpful in moving things forward. However, having a good relationship with someone can give a false sense of security and trust when a company says it will license an item. We may also give the company more time or leeway because of our relationship. There is a fine line we need to walk here. We don’t want to ruffle any feathers; at the same time, this is business and our livelihood.
- Miscommunication. Sometimes, communication can be off and misunderstandings can happen. This can include terms not set before getting to the stage of saying “yes”; maybe the person you are working with doesn’t fully understand what the owner/company typically agrees to for licensing deals. Be sure to follow up calls/meetings with a summary or bulleted talking points of the call.
- Expectations. Understanding the company’s timeline and what all needs to happen before you are actually given the contract is important. Often, companies will say they want to move forward with your product but first need to get factory samples, pricing and more. This can take several months. Other companies license the product and then figure out all that information.
The ‘option’ option
Because every situation is different, I have found there is no exact way to go about things. But you have to know what you are willing to ask, do and give in these situations. I have personally had a “yes” change to a “no” and deals fall through for various reasons, including those listed above.
One option is to ask for an “option” if a company wants you to stop pitching your concept. This is like a holding fee: The company gives you an agreed-upon amount of money to stop pitching your concept for an agreed-upon timeframe. When the time is up, the company either licenses the concept, signs another option, or you start pitching it again.
I have witnessed people waiting over a year for a licensing contract while the company was working on things, and the deal fell through. This is time we can’t get back. Ask questions and stay on top of things, helping to ensure the process is progressing as planned—whether you stopped pitching or not