7 Ways to Transform Your Intellectual Property Department from a Cost Center to a Revenue Generator
7 Ways to Transform Your Intellectual Property Department from a Cost Center to a Revenue Generator: Why is ‘intangible asset’ becoming a buzzword for tech-era businesses? Traditionally, sales of services and products have been considered to be the primary revenue generator for a business. But this is an age of innovation where ideas and concepts determine whether your company flourishes or flounders.
Today, the intellect is being harnessed to bring in stacks of money for a company. This is where the concept of intangible assets comes in. These are assets that do not have a physical body but are instrumental to the company’s income. And intellectual property department is the heavyweight among all intangible assets.
Most businesses have some form of intellectual property, be it patents, copyrights, trademarks, trade secrets, or rights to industrial designs. So important is intellectual property to a business’ revenue generation that these assets contribute to more than 80% of the company’s net value.
But unless the business knows how to milk intellectual property department for what it is worth, IP can become just another cost center. It will guzzle costs because you’ll have to allocate a substantial sum to keep it operational but it will not directly produce profits.
But intellectual property can be your business’ cash cow. IP is not a short or one-time revenue opportunity. Savvy entrepreneurs have the wherewithal to monetize their IP and turn it into a steady stream of income for their business. And the good news is you too can do it. Here’s a primer on how to create passive income by turning your IP into a glorious side hustle!
1. License your Intellectual Property Department
If you own a business or start-up or even if you don’t (suppose you are a freelance writer/translator/designer), you are producing intellectual property. It could be your business idea, any new product or service that you have developed, your company logo, any literary work such as an essay, novel, biography, any artistic work, advertisement, tag lines, computer programs, commercial designs, etc.
First things first, you need to be able to identify your intellectual property. Any original work is your brainchild and hence your intellectual property.
Next, you need to section them into patents, copyrights, trademarks, design rights, or trade secrets. Now, to ensure that only you can make money off your creation, you will have to protect your IP by licensing it. This will ensure that only you (the licensor) can make money from your intellectual property through an agreement with another party (the licensee) and your competitors won’t piggyback their way to the bank on your hard work.
These licenses last for a particular number of years. And for every sale, you will earn a certain amount of money for as long as the license is valid. This is the simplest way to monetize your Intellectual Property.
2. Develop new products from your existing IP Department
Try to turn your existing IP into as many new commercial products as possible. This will help you acquire quite a few new patents with relative ease. Often enough, a company’s worth is defined by the portfolio of patents and other licensed intellectual properties it holds. And together, these can help you rake in the moolah!
3. Consider becoming a franchise
One sure-shot way of making more out of your intellectual property is franchising. Food delivery businesses showed us how a simple idea can become a billion-dollar industry simply through franchising.
Licensing means allowing others to run a business under your company’s name based on your intellectual property. You will provide the initial know-how. This way, your product/service will be more extensively marketed. You will be paid a percentage of the revenues generated by people who are operating under your name.
4. Negotiate royalties
If your client intends to use your intellectual property to drive up his/her sales, charge a royalty. This is a kind of fee that the continuous use of your idea/service/product warrants.
Another quick way to generate more revenues off your IP is to link it to affiliate programs that pertain to your area of expertise. You will be able to collect commissions from all sales that arise out of the affiliate links.
These days many services are a conglomeration of multiple parts and you may not be a pro at all of them. To launch your service, you might need the help of other experts. Suppose you are creating an online study module, the idea is yours but you are not great at design. So this is where sub-contracting comes in. Delegate those tasks that you are not good at to others. But don’t forget to purchase their work so that there can be no other claimants to your intellectual property. This way your IP department won’t languish on the shelf and you can launch it and make a lot of money off it.
6. Out license your Intellectual Property Department
Out licensing means that you, the owner of the intellectual property, can grant a third party the right to use your IP to develop a product or service and commercialize it to generate revenues. You can increase the ROI and also get the opportunity to operate in different industries.
7. Sell your portfolio
Once you’ve built a sizeable portfolio of patents, sell it in bulk. You can go the auction route or sell directly to other companies. Selling all your patents outright will infuse a lot of cash into your company.
These are just some of the ways you can get the most out of your intellectual property. The longer you stay in the business, the more efficiently you will be able to discover ways of monetizing your IP. So, keep innovating and creating!
-The Editorial Team