by Paul Lawrence

I had some good news yesterday. The latest product I licensed to a marketing company has brought in about R250,000… so far. So from this one product alone, I will be receiving a royalty that will net me at least a R25,000 profit for the year, although it will probably be more.

Plus, I’ll be getting royalties of between R5,000 and R10,000 from two other products that I licensed in 2008. Which means my total profit for the year from products I’ve licensed to other companies will likely be between R35,000 and R45,000.

The most amazing part of this is that - other than keeping track of what I’m owed - I won’t have to do much more than cash the cheques.

I’m not telling you this to boast. I just want to give you an idea of how good this little side business is. And it works for a wide variety of products. (My current deals vary from an educational investment product to a natural health supplement.)

The essentials of the business are fairly simple. You either create your own products or acquire the rights to market other people’s products - products that you believe will appeal to a significant number of prospective customers. Then you approach marketing companies that have more resources than you do, and you sell them the rights to market those products.

Today, I’m going to show you how to find companies to market the products for you.

While it’s certainly possible to make licensing deals with major marketers, I’ve found that it’s much easier to work with smaller direct-marketing companies. Though these companies employ only a few people (because they outsource so much of their work), many of them bring in millions of rands every year.

That’s the kind of marketer you want. They’re extremely good at what they do - but, because of their small size, it’s easy to get to the person in charge of making decisions. As a result, you can make deals quickly, without being put through a lot of bureaucratic red tape.

How do you find these companies?

The best source I know of is list brokers.

You see, most direct-marketing companies have relationships with list brokers. That’s because they need “names” to market to. And though they may have a house list (names of their own customers), they also need to rent names from other list owners.

The list broker is the middleman.

The list broker is very familiar with her clients. In order to be able to recommend appropriate lists to them, she has to know what kind of products they market and how successfully they do it. So if you contact a broker who has a fairly large client base, there’s an excellent chance she’ll be able to connect you with companies that might be interested in your products. (Naturally, you’ll have to compensate her for doing this. But if it leads to a deal, it will be well worth it.)

Here’s how to use list brokers to help you find direct-marketing companies to license your products to:

1. Get names and contact information for list brokers from trade organisations and industry publications.

2. Before you start contacting the brokers, prepare a phone or written presentation that you will use to explain to them (a) what your product is, and (b) that you are interested in licensing the rights to a direct-marketing company.

3. Put together another presentation that the brokers can use to pitch the licensing opportunity to direct-marketing companies that show an interest in your proposal. You will submit this to the brokers, who will then forward it to the companies.

4. Once a broker has found a direct-marketer that is interested in your product, you’ll sign a licensing deal with that company.

It’s as simple as that!