Intellectual property might seem like a vague concept, but in reality, it creates a great deal of value in all businesses. Every time you make even the smallest purchase, there’s a good chance that intellectual property is a big part of the price you pay. When you’re ready to grow your business, building up your intellectual property is a great way to do it.
Not sure where to start? Here’s a basic roadmap for creating and building up intellectual property in your business. You may find that it’s simpler than you think!
1. Determine what you want from the intellectual property in your business
The first step in building your business’s intellectual property is understanding exactly what you want and why you want to have intellectual property. A few reasons for building intellectual property might include:
- You want to sell your business in the future. Businesses that are profitable but don’t have intellectual property aren’t as valuable as those that do. Building intellectual property greatly increases your business’s value when it comes time to sell. Think about what intellectual property is valuable to your potential buyers.
- You have expensive development costs. The more expensive it is to develop your product or set up your service, the more important it is to make larger profits from it. Locking in intellectual property in your business can offset those costs.
- You want to keep copycats away. Securing your intellectual property protects your unique brand. Making your customers aware of it gives your brand authenticity. When your intellectual property is protected, others won’t be able to take your exact idea and claim it as their own.
- You want to earn royalties. Licensing and earning royalties on your intellectual property can be extremely lucrative. To do this, you need to know what intellectual property your customers will find valuable, then determine how you’ll price it.
2. Identify your intellectual property and secure your process
Look at your business and take inventory of what aspects have intellectual property, or those with potential to have intellectual property.
Many business processes don’t qualify as true, protectable, intellectual property. For example, most of your general operations (like the steps you take to produce goods and services for your customers) probably don’t qualify as intellectual property. However, if you’re doing something that’s novel and wouldn’t be obvious to an industry expert, then it could be protectable.
What does obvious to an industry expert mean? Well, that’s subject to the opinion of the agent at the U.S. Patent and Trademark office, and it’s your job to prove that it meets this qualification. For this, it’s important to hire an experienced intellectual property attorney. They’ll be able to advise you and complete the filing to prove the validity of your claim.
If you are planning to invest substantial money into researching and developing a new product or service, then it might be worth securing the intellectual property. A patent protects you or your businesses right to own what you’ve created. The more you invest in developing these processes, the more it’s worth it to get a patent on them.
3. Branding your business
The most basic part of your intellectual property is your branding. To have a truly unique brand that customers recognize, you’ll need to make sure that you have a custom color palette, brand name, logo, fonts, and vectors for your brand. This all makes up your brand kit.
You’ll need to commit to using this brand kit everywhere moving forward. That includes internal and external communications, online design, in-house design, and printed materials. Keeping your brand consistent supports that it’s uniquely yours. Customers can easily identify when communications and materials come from your brand based on the all the elements mentioned above.
Once customers can identify your brand, you’re on your way to building value in your brand. The next step is getting a trademark and/or a copyright for your brand. Whoever files for a trademark or copyright first is the owner. If you’ve been using a logo or a trade name for years but never filed for these protections, someone else can come along and file them. Make sure you file for it as soon as possible.
Trademark and copyright protections can’t prevent someone from stealing your brand identity, but they can give you recourse in stopping them. It creates a public record stating that you do, in fact, own your designs and tradenames.
4. Monetizing the intellectual property in your business
Once you’ve carefully crafted and secured your unique intellectual property and built up its value, you may be in a position in a few years to monetize it. Here’s how you can do that:
Selling your intellectual property
You can price your intellectual property to sell by estimating its value in a few different ways. What value does it have when you use it? How does that change when you license it out? What’s its worth compared to similar intellectual property?
If your business has processes as its intellectual property, then you’ll likely price it out based on its utility and the value of licensing those processes out. If trademarks and copyrights are the intellectual property in your business, then it will be priced based on its licensing value and its worth compared to similar intellectual property.
Earning licensing fees and royalties
Earning revenues from your intellectual property starts by projecting its value. Licensing fees can generate revenue when others ask to use your intellectual property. You can calculate fees in two ways: a fixed price-per-use or a percentage of revenues.
Fixed price-per-use is cut and dry, with less work involved in monitoring your licensees. The percentage of revenues approach requires continuous monitoring of how your intellectual property is used but can lead to significantly larger revenues.
Building up intellectual property in your business takes capital
Whether you’re hiring a designer to create your brand, or an intellectual property attorney to file your claims, you’ll need capital to make it happen. That’s where Pursuit can help! We offer more than 15 different business loans to fund your ambition. Start your application today or give us a call to walk you through the process.
