Looking for a cost-effective means to create another income stream? Consider this: ambitious companies are always on the lookout for the next lucrative business idea.
Licensing your intellectual property to another company can be a win-win when both parties see eye to see, and result in a worthwhile pay out for all concerned.
Wondering how to get started licensing your bright business ideas? Read on.
Intellectual property 101
If you’re running a successful small business, you already own valuable intellectual property (IP)—some of which could be licensed to another party for a profit (e.g. your logo, brand, trade secrets, or unique business processes).
Each of these “intangibles” is a valid financial asset that can be legally protected or licensed to another party.
In fact, any creative work—ideas, designs, and products—that have value for a business are IP. A licensing agreement ensures your intellectual property is recognized and you are fairly compensated for their use.
Generating million dollar ideas
Now that you understand how licensing works, you can begin to brainstorm some original, unpatented money-making ideas.
A good place to start is with a review of your industry and market. Take note of any gaps that could be filled, and problems you’d like to see solved. A great advantage of looking within your own industry is you might already know an interested licensee within your existing network—or just a quick phone call away.
Come up with an extensive list and then research your top ten promising ideas. Before you get too far (and to avoid disappointment) make sure someone else hasn’t already registered your ideas with a patent office via Google’s patent search.
The business of licensing
To learn more about licensing agreements, it’s best to get in touch with your government’s intellectual property (IP) office. Rules can vary in different jurisdictions so seek advice from an officer who can best advise on next steps to apply for a patent, file a trademark application, or draft a legally binding licensing agreement—as well as any costs for doing so.
Be sure to visit the World Intellectual Property Organization website, too, for a wealth of information on how to license intellectual property internationally.
Building credibility with potential licensees
Stephen Key, entrepreneur and IP strategist, calls success with licensing a “numbers game”—contact a long enough list of prospective licensees with enough good ideas and eventually you’ll hit pay dirt.
However, you’ll make a better first impression—and protect your valuable IP in the process—by demonstrating you are already running a successful, legitimate business in your own right.
If you haven’t yet, register:
- your company name
- a unique URL for your company website and
- your intellectual assets
By demonstrating you are credible and IP savvy, you’ll put yourself in the best possible light—someone an interested licensee could easily picture themselves doing business with.
Registering your business, domain name, and intellectual assets will also put your business in a much better financial position if you ever decide to sell.
If you hate cold calling, get discouraged easily, and can’t stand rejection, promoting your business ideas to potential licensees may not be the right fit for you. The good news is, there are a host of other ways to generate more income for your small business—and there’s nothing wrong with keeping your best ideas for yourself.