When you are consumed by an idea – as most entrepreneurs are – it’s not always easy to put the car in park and take an inventory of your business. There’s work to be done, right? Goals to pursue. Clients to call. Customers to serve. Employees to inspire. There’s a strong pull to go, go, go …
There is value, however, in having a clear picture of the value of your business. And for many entrepreneurs, that value is greater than they think. That’s because those of us who take the time to list our assets tend to focus only on the physical – computers, officer furniture, products in a warehouse, and the like.
What else is there?
As my friend Jason Webb pointed out to me recently, there also is our intellectual property, the intangibles of our business that we tend to overlook. For me, it’s things like the ideas and terminology in my books and that are central to my leadership processes.
Webb, a partner at Pearson Butler & Webb in Utah who specialized in intellectual property, tells me that these assets aren’t small potatoes, not for me and not for most entrepreneurs. In fact, they might be as much as 80 percent of the value of your business.
Obviously, it makes sense to count and take good care of these assets. Many leaders, however, don’t even realize they have intellectual property much less know what to do with it. So, based on my conversation with Webb, here are three ways to make sure you’re not missing out on the value of your valuable IP:
ID your IP
Webb suggests that business conduct an “IP audit” at least once every two years.
“If you don’t recognize that you have an intellectual property asset,” he said, “then how can you take the next step, which is figure out how to protect it?”
Intellectual property is simply property you can’t touch. The big-screen television in your conference room is physical property. The design for the television is intellectual property. The most common examples include things such as branding; proprietary business models, processes, or systems; trade secrets; patents or copyrights; contracts; and customer lists.
When you take your IP inventory, start by listing everything about your business that’s unique. If it would hurt your business to give something to a competitor, then there’s a good chance it qualifies as your intellectual property.
Invest in Security Systems
When you own something of value, you want to protect it. When it comes to protecting intellectual property, Webb suggests four main ways to create security.
- Build a Wall: In this case, the bricks in the wall are contracts. If employees or investors have access to your IP, for instance, you might have them sign non-disclosure agreements.
- Hang Some Signs: Warnings like trademark notices, copyright notices, and patent-pending notices create an awareness that you’ve identified your IP and that you are serious about protecting it.
- Make it Legal: You can protect your IP by taking advantage of the appropriate legal registrations. A federal trademark, for instance, legally protect things like the use of your logo. This isn’t just a one-time action. Some registrations, for instance, must be renewed, so make sure you are aware of, and act on, those types of deadlines.
- Stand Guard: If you and your team are vigilant, you’ll notice when someone (like, I don’t know … a competitor) is using something you consider to be your intellectual property. The more you monitor the marketplace, the more likely you are to see something that’s afoul and the sooner you can take action. “It’s like a baby,” Webb told me. “A baby doesn’t automatically protect itself. You have to pay attention to it.”
Make it Pinterest Worthy
Spend any time on Pinterest, and you’ll quickly notice that folks are always finding new ways to turn ordinary stuff into something with an entirely new use. One man’s junk is another man’s lampshade. The same often is true of intellectual property. We come up with ideas to solve specific problems and for specific situations, but there’s often value in repurposing our IP for other uses.
Delta Plastics, for instance, makes a tubing that farmers use for irrigation. The pipes are rolled out across fields, but they can’t be re-used from season-to-season. So, the company invented a way to clean them up and recycle them into a commercial resin. At first, they sold most of the resin and used small amounts to make new tubing. Then they realized they also could make and sell EPA-compliant trash bags, and that’s become a huge revenue stream for their business.
Artists in the music industry also can take advantage of verticals for royalties connected to their IP rights. That hit song on an album, for instance, also could earn income on commercials, in restaurants, and on elevators.
“Sometimes, more of your money will come from a secondary revenue stream than from the primary one that you created it for in the first place,” Webb said.
It doesn’t have to be an invention or creative piece. Maybe you have a great business process that you could sell and teach to businesses in a non-competing industry.
Regardless, the point is to value the parts of your business that are unique but that aren’t physical assets. If you value your IP, it will add value to the future of your business. And every time you stop and take inventory, you’ll find much more worth counting.
[This post was originally published on my weekly column at Inc.com]