In business, there are two main ways to make money: selling products or services or licensing. And while both have their advantages, more and more businesses are finding that licensing is the way to go. Why? Because it’s an asset-light model that can help you thrive, even in today’s unsure economic climate.
What is Licensing?
Licensing is simply renting out the use of your intellectual property—like your patents, trademarks, copyrights, or trade secrets—to another business. And while it might seem like a strange way to make money, it can be pretty lucrative. After all, if you own the rights to something that another business wants or needs to use, they will be willing to pay for the privilege.
An Asset-Light Strategy
There are several reasons why licensing might be the right option for your business. For one thing, it’s an asset-light model that doesn’t require investing in inventory or other physical goods. That means less overhead and less risk for you. Additionally, licensing gives you a steady stream of revenue that you can count on, even in tough times. And because you’re not selling products, you don’t have to worry about production costs or shipping.
In addition, licensing gives you more control over how your products are used. When you sell products outright, you have no say in how they’re used or what happens to them once they leave your hands. But when you license your products, you can include provisions that protect your interests and ensure that the products are used as intended.
Finally, licensing can help you build relationships with other businesses in your industry. When you license your products, you form a partnership with the licensee. That can lead to valuable marketing opportunities and even joint ventures or acquisitions down the road.
The Bottom Line
Asset-light businesses that rely on licensing are agile and adaptable—two qualities that are increasingly important in today’s ever-changing marketplace. If you’re looking for a way to thrive in today’s climate, licensing might be just what you need.
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Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money Making Power of Licensing was released in 2019 and is available on Amazon.com. He’s also a published writer with articles appearing in several prestigious trade magazine including The Licensing Journal, Intellectual Property Magazine, and License India. Rand also mentors at the Cal State Fullerton School of Business and Economics and is a judge for their startup business plan competitions.