There are many ways to earn passive income, from publishing ebooks to hosting your own YouTube channel. That said, coming up with an idea for an invention and licensing it to another company is one that appeals to many people.
This process does take some degree of work—most passive income strategies require you to invest time, effort, and money before they yield rewards. That said, if you are able to license a product idea, you could eventually stand to earn a relatively substantial amount of regular money on the side.
You just need to come up with an original idea first. The following tips can help get your creative juices flowing. If you’re thinking about inventing a product you can license for profit, keep these points in mind.
Look for a Need
The phrase “necessity is the mother of all invention” is quite correct. In many cases, people have come up with ideas for new products when they identified a problem and thought creatively about how to solve it. Then, they decided to market their solution to customers.
The same strategy may work for you. That’s why it’s a good idea to pay attention to any minor problems you experience in daily life (whether at home or at work) that a new product or service might be able to solve. Jot down every problem you notice; try breaking down big problems into smaller issues or sub-problems, which can help you understand all the difficulties or pain points involved. After a few days or weeks, you should have a decent list that may help you find the seed for a new invention idea.
Once you have a list of problems that need a solution, take a look at those that seem solvable—or those you care the most about or find particularly pressing.
Start to brainstorm ideas for tools or products that could offer solutions to these problems. At first, you may struggle. This is understandable. It may seem difficult to invent a new problem-solving tool if you’ve never tried to before. That said, if you’re willing to devote some time to this process, you may end up surprising yourself by arriving at smart new ideas that you wouldn’t have considered if you hadn’t taken the time to think on these topics in greater detail.
Focus on a Niche
Some people find it’s difficult to come up with an idea for an invention because they believe all the good ideas are already taken—that there’s already a solution to the problem they’ve observed, and if there isn’t, this indicates the problem simply cannot be solved or that it’s just “part of life.” In addition, people often believe they lack the technical expertise to come up with an idea that would address bigger, more complicated problems.
It’s true that solving some problems does require specialized, advanced knowledge, and you’re better off disregarding these problems to focus instead on something more manageable. Still, don’t sell yourself short, and don’t assume that just because there’s no solution to a particular problem, this means it’s impossible to solve.
If you’re not confident in your ability to come up with an invention idea that solves a common problem, it can be helpful to focus on a niche. Inventions that address smaller problems—those that only affect a particular group of people or an industry—are sometimes easier to think up, because these problems haven’t received as much attention.
For example, think about your hobbies or favorite pastimes, and any related problems or frustrations you’ve encountered. For example, maybe you love keeping house plants, but you travel a lot for work and your plants tend to die because they aren’t getting enough water. Is there a new solution for keeping them watered that would work better than the other devices you’ve tried?
Directing your attention to problems of this sort provides focus for your creativity—it’s very difficult to come up with solutions to huge, vague, or unspecific problems. And because you enjoy your hobby, you probably know a lot about the unmet needs related to it, and will find it easier to arrive at a solution that’s truly unique and viable.
Improve on an Existing Idea
It’s not uncommon for successful products to offer improved solutions to problems that have already been addressed. Pay attention to the experiences you have with every product or service you use. Once again, it helps to jot down notes—try keeping a notebook with you at all times, or writing down notes on your smartphone.
Are there any products you own that don’t seem to offer the ideal solution to the problem they’re designed to solve? Maybe you can come up with a better idea. Granted, your idea will have to be different enough from the existing product to avoid simply re-creating someone’s idea, but this tactic is one of the smartest ways to think of a new invention efficiently.
The Value of Licensing
Once you have your idea and patent it, you can sell it yourself, but this can require a lot of time and money. If you’re interested in a more passive approach, licensing it may be the best option. Major brands often pay others for their new product ideas. Along with an upfront payment, you’ll also receive a percentage of the revenue from the company’s sales.
Will you make more money selling the product on your own? Possibly. However, major brands have the resources necessary to bring your product to market. In the long run, licensing is certainly the easier approach, and it may even be the more profitable one.