Summary of Business Lunch Podcast Episode: Boost Your Business Profits with 5 Licensing Strategies | Bob Serling
Podcast: Business Lunch
5 min. read
— Description —
Discover the advantages of licensing and how it can help you avoid risks and costs associated with creating and selling a product Learn about different licensing strategies, including certifications, IP licenses, repeating circuit joint ventures, and tollgates Find out how licensing can be a profitable option for most people.
Boost Your Business Profits with 5 Licensing Strategies | Bob Serling
Table of contents
Key Takeaways
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To license means to grant someone else permission for the use of something while you still retain ownership
- For example, George Foreman didn’t invent the George Foreman Grill, he licenses out his name and likeness to the company that made the grill
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An advantage of licensing is that you don’t take on much risk while still getting the upside
- The licensee takes on the manufacturing, distribution, and advertising costs while the licenser risks the possibility of hurting the brand of the license
- Licensing is comparatively easier and more profitable for most people because of all the risks and costs associated with creating and selling a product yourself
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Profit cloning is Bob’s replicable method of guaranteeing success for a product
- “I almost never invent an original product, what I do instead is invent an improvement for a product that’s selling really well”
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Licensing Strategies:
- Certifications
- Licensing a service or training program that provides a certification that must be renewed
- IP Licenses
- Licensing a process or intangible product/service as intellectual property
- Repeating Circuit Joint Ventures
- Brokering repeatable joint venture licenses between companies
- Tollgates
- Whenever you provide a good/service the customer will have additional needs that need satisfying. You can act as a ‘tollgate’ and lead them to providers who will satisfy those needs.
- Certifications
Intro
- Bob Serling is a 30-year marketing entrepreneur and the founder of Profit Alchemy, Inc. and Licensing Lab
- Host: Roland Frasier (@RolandFrasier)
What is licensing?
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To license means to grant someone else permission for the use of something while you still retain ownership
- For example, George Foreman didn’t invent the George Foreman Grill, but he licensed out his name and likeness to the company that made the grill
- The grill was so successful that the manufacturer decided to license George Foreman’s name in perpetuity, meaning indefinitely, for a flat $137.5 million in stock and cash
- For example, George Foreman didn’t invent the George Foreman Grill, but he licensed out his name and likeness to the company that made the grill
- “Almost anything that a business owns is an asset that can be licensed” – Bob Serling
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An advantage of licensing is that you don’t take on much risk while still having the upside
- The licensee takes on the manufacturing, distribution, and advertising costs while the licenser risks the possibility of hurting the brand of the license
Getting a Physical Product to Market
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Steps:
- Invent a product ready for manufacturing
- Secure a manufacturing deal for your product
- Countries with cheap manufacturing costs like China or Vietnam will sometimes require bribes
- Buy inventory from the manufacturer
- Find a distributor
- This is the hardest step, especially for first-time entrepreneurs without a track record
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Licensing is comparatively easier and more profitable for most people because of all the risks and costs associated with creating and selling a product yourself
- Most physical products also have low-profit margins
Profit Cloning
-
Profit cloning is Bob’s replicable method of guaranteeing success for a product
- “I almost never invent an original product, what I do instead is invent an improvement for a product that’s selling really well” – Bob Serling
-
Bob will buy different versions of the same product to see what they’re missing and do research to figure out how he can improve it
- He will research how he can incorporate ideas from other industries to improve the product
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Take advantage of media & market trends when considering what product to introduce to the market
- “You can get literally tens of millions of dollars of research for free. You go to Amazon and you look at the best-seller category. You also go to the trade journals for whatever industry you’re in.” – Bob Serling
Licensing Strategies
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Certifications
- Licensing a service or training program that provides a certification that must be renewed
- For example, you can license a course that teaches how to run Facebook ads which someone else will run while you own the course material itself
- It’s different from franchising because the licensee will control how they use the licensed material and not be held accountable to the licenser
- Licensing a service or training program that provides a certification that must be renewed
-
IP Licenses
- Licensing a process or intangible product/service as intellectual property
- For example, a man created a method of high-quality printing using thinner ink and licensed the method to many printing companies
- Like software, licensing intangible goods & services is highly scalable and can create exponential profits
- Licensing a process or intangible product/service as intellectual property
-
Repeating Circuit Joint Ventures
- Brokering repeatable joint venture licenses between companies
- For example, you can broker a yearly joint venture license between a sheet music and musical instrument company to promote themselves and offer bundled deals
- Brokering repeatable joint venture licenses between companies
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Tollgates
- Whenever you provide a good/service the customer will have additional needs. You can act as a ‘tollgate’ and lead them to providers who will satisfy those needs.
- For example, if a customer hires you to SEO optimize their business website they might also want someone to run new ads and you can connect them to a copywriter
- It’s a win-win-win situation; the customer fulfills their need, you make money, and the new provider gets a customer
- “Relationships are leverageable assets” – Bob Serling
- Whenever you provide a good/service the customer will have additional needs. You can act as a ‘tollgate’ and lead them to providers who will satisfy those needs.
Negotiating Licensing Deals
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Always secure a retainer agreement for yourself when negotiating a licensing deal
- By paying you in advance the business hiring you has skin in the game and you eliminate the risk of being ripped off
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Define the minutiae of the deal
- If your fee is 20% of net profit, make sure you define how net profit is calculated
- “Anytime you get greedy, deals fall apart quickly” – Bob Serling