Increase Cash Flow
Licensing is a tried and true business model that makes companies billions
of dollars every year, typically with only minor upkeep and expenses.
In licensing, the Licensor allows the Licensee to use the Licensor’s
intellectual property in exchange for payments, royalties, etc. The foundation
of this agreement is the intellectual property owned by the Licensor.
The more valuable and better protected it is, the more lucrative the arrangement
for both parties. If you are interested in building a business around
a licensing model, it is critical to obtain strategic protection for your
The licensing model can be an important revenue generation tool for any
business. No company can take advantage of every opportunity they have.
Identify the opportunities that you are leaving on the table. These opportunities
are chances to build a licensing revenue stream for your company. Once
you have identified these opportunities, build a strategic portfolio of
protection around them so that when you find your licensing partner, they
have a reason to keep sending you checks.
Other ways to increase your cash flow through intellectual property (IP)
include monopoly pricing, joint ventures where you bring the IP to the
table, using your IP to service your competitors, and leveraging IP to
gain market share. Most of these strategies have low associated costs.
This means the benefit accumulates directly to your bottom line.
Increase Net Worth
Intellectual property can have a Return on Investment (ROI) of 10x, 100x,
1000x, 10,000x or more. Some intellectual property (especially trademark
registrations) have inflating values over time. If you want to increase
the net worth of your company, especially the all-important exit valuation,
be sure to load up on the right intellectual property. For most companies,
the majority of the net worth is not in the hard assets like equipment
and buildings, but in the intangible assets like their branding and goodwill,
contracts and relationships, and technology and content. Without protection,
your intangible assets are worth only a small fraction of their potential.
Companies are interested in becoming acquired do well to position themselves
to be attractive. But, if they do not protect their intellectual property,
they might only be attracting competitors.
Many companies are undervalued because they are under protected. Protecting
your intellectual property will increase your value and it will also provide
registrations, contracts, and other forms of ownership rights that can
be leveraged in many ways, including being used to secure loans or access
to lines of credit. It also reflects on your leadership by showing that
you take care of your property and can be trusted. Look around your business
– there is more value than you imagined.
Every business has operating expenses. On top of that, certain expensive
events are considered to be the “cost of doing business.”
These include lawsuits, theft, and competitive market pressure. The worst
part of these expenses is that they are usually impossible to predict
and therefore not “in the budget.” They rob you of opportunities
by stealing resources you planned to use elsewhere. However, well-protected
intellectual property keeps many of these events at bay, therefore decreasing
Most companies respect intellectual property. That means that they will
make decisions and behave differently in the face of your intellectual
property. Your intellectual property acts as a shield of respect around
your business. People are less likely to sue you for things like trademark
infringement or patent infringement because they are less likely to win.
Even if you are engaged in a lawsuit, the cost of the suit will be less
expensive if you have strong intellectual property. You will also suffer
from less theft of your intellectual property because the penalties for
taking are so severe. The intellectual property certainly fits the saying,
“An ounce of prevention is worth a pound of cure.”