Why Reinvent the Wheel, License What You Got
As entrepreneurs, we’re often told to create new revenue streams and new content. Let’s be honest, it can be very overwhelming and exhausting to be in a constant state of creation.
What if I tell you that instead of creating new content, you don’t need to reinvent the wheel and just license what you’ve already created and enroll more people in your vision? I’m not talking about employees or independent contractors, but I’m sure your business and your team will continue to grow there, too.
Licensing is an incredible way to scale a product-based or service-based business. If you need a tangible thing to grasp into, licensing looks a lot like a franchise. Want to learn more about licensing? Continue reading.
I’m sure you’re familiar with franchises. A franchise is when someone who has created a recognizable brand with associated goodwill and systems in place, bundles up all of those rights and know-how to enroll other business owners into their vision. But how do they do that?
Of course, business owners do that by setting clear expectations through a licensing and franchise agreement. I want you to know that this is not only for “big franchises” that we drive past every day; it’s a strategy you can use in your business, whether you’re a product based-business or service-based business.
License is the new revenue source you’ve been waiting for. Let’s tackle how both product-based business or service-based business can use licensing in your business.
Sometimes, as a service provider, you may feel like the scalability isn’t just available to you unless you hire a team. Instead, I want you to leverage your time and the content you’ve created.
What would it look like to license out your intellectual property? Just so we’re clear, this means not only your trademark but also your copyright content to other business owners to enroll them in your vision.
As a service provider, you may have a system and know how to get up and running in this new system. People may be telling you that you need to coach, but not all of us are meant to coach. Some of us are incredible at what we do, and we want to continue to focus on that.
Well, that’s excellent! Lean in, continue to focus on your skill, but don’t stop there. Don’t think that you can’t enroll people in your vision. Most of all, don’t think that the only people you can enroll in your vision are your employees or independent contractors.
How does licensing work for service-based businesses?
If you have an existing method or if you’ve built a reputable brand, think about how you can license those rights to another business owner who is great at that skill but doesn’t have the know-how, systems, or brand that you’ve worked hard to create. Enroll these people in your vision licensing the right for them to use your method and brand.
But how? You’ll need to first trademark your brand so you can “license” it to certain individuals or businesses and then they can leverage your brand recognition and the goodwill associated with it. Of course, you have to set clear expectations to make sure that all parties are on the same page, and that these individuals or businesses foster aligned growth and goodwill that you have in mind for your business.
Also, you can license the copyrighted materials, systems, procedures, workbooks, and the information that drives the day-to-day operations of your service-based business. Together, these rights essentially become a business in a box—a process in a box for the business owners you’ve collaborated with.
Can I monetize the license for my business?
There’s a couple of ways to monetize a license. You may do it through upfront investment, flat rate investment, royalty investment, or a combination of all these types of investments.
The most common is a combination of an upfront or flat rate investment with a specific royalty investment. This is because as these other individuals or businesses grow and scale what you’ve built, you can monetize based on their growth. It also makes their investment more approachable on the front-end so other business owners can get started (when they don’t have as much revenue coming in), then leverage their growth via royalty income.
In short, it’s a win-win for both sides. You’ve taken the risk, so you should be able to reap the benefits for carrying the majority of the risk and investment.
Product-Based Business (Digital Products)
Now, let’s talk about digital products. If you create a digital product, think about how you can shift your perspective. You’re likely marketing your digital product directly to the end-user, but what if you could also license your digital product to someone who can infuse a new purpose to the digital product or can tap into a different pool of your ideal end-user by incorporating into their own offerings (they become the “licensee”).
Essentially, you can think about the licensee like a distributor of your digital product. By licensing your digital product (your intellectual property – both trademark and copyright) the licensee can drive more sales to the digital product while you collect your licensing fee.
Is licensing the same as an affiliate program?
Now, you might confuse licensing your product-based business as the same as an affiliate program. Please take note that licensing shouldn’t look like an affiliate program. It’s not asking other business owners to promote what you sell. It’s actually giving them the tools to offer the licensed products and services themselves, with a level of autonomy consistent with the expectation set in your agreement.
Product-Based Business (Physical Product)
Say you have a physical product that people love that was created based on your original design or secret sauce (confidential formula). The good news? You can actually license it in one of two ways.
Yes, you can allow other business owners to white label your design or product. This means stripping your branding and allowing them to leverage the behind-the-scenes magic and recipe you’ve created to, in turn, promote the design or product as their own under their brand.
Another way you can license the product is to allow it to be sold in a certain territory under your existing brand. For this strategy you are licensing more than the original design or secret sauce but also your brand. This is an excellent strategy for a business owner that has created a wonderful brand with associated goodwill that you want to continue to grow in this current territory, but maybe you don’t intend (or want) to grow the brand in another territory.
Great, license your brand to someone who is fully invested in the success of your brand in this new territory and has the time and energy necessary for the brand to flourish while you get to focus on your own territory. Again, it’s a win-win for both sides!
I don’t want you to think about intellectual property as only protecting your rights from everybody else and standing on an island alone. Instead, you should see how your intellectual property can be collaborative and how you can leverage it (in the right way). Advocating for your vision in the right way will allow you to enroll more people in your vision, scale and grow your business, allow others to also scale and be successful, and make more impact along the way.
You’ve seen the smiley face before, right? Well, did you know that the smiley face is actually trademarked and has been existing since the 1970s? It’s owned by Smiley Co. As you can imagine, the company is quite profitable because of the extensive use of the “smiley face.”
For anyone to legally use the smiley face (and all its variations), they must license the right from Smiley Co. The company has invested time and effort into protecting its design instead of reinventing the wheel and coming up with the next life-changing design that the whole world will recognize.
Smiley Co. didn’t create every smiley face t-shirt or every piece of merchandise associated with the smiley face design. Instead, they focused on owning what they have and licensing it out to leverage the design they’ve created.
Guess what? It’s still a win-win. People get to create using these very recognizable iconic smiley faces that we know and see today, but Smiley Co. also continues to honor its vision and the intellectual property that it created almost 50 years ago.
It has been a never-ending revenue stream for the company. After all, their success wasn’t because they did it all alone, but because they enrolled other people in the vision. The company advocated and owned their intellectual property, they owned their brand. Then, they looked at what they could do next. Smiley Co. didn’t reinvent the wheel. Instead, they licensed what they already had.
Don’t be afraid to enroll more people in your vision. Creativity comes in many forms. So, before you’re tempted to reinvent the wheel, instead, advocate for your brand, own your intellectual property, and leverage your business through licensing and collaboration.