June 18, 2020

5 Licensing Strategies to Add a 6 Figure Profit Center to Your Business | Bob Serling on Business Lunch with Roland Frasier

Check out the Business Lunch Episode Page & Show Notes

Key Takeaways

• 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
• 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
• 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”
• 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.

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?

• 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
• “Almost anything that a business owns is an asset that can be licensed” – Bob Serling
• 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

• Steps:
  1. Invent a product ready for manufacturing
  2. Secure a manufacturing deal for your product
     • Countries with cheap manufacturing costs like China or Vietnam will sometimes require bribes
  3. Buy inventory from the manufacturer
  4. Find a distributor 
     • This is the hardest step, especially for first-time entrepreneurs without a track record
• 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
• 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

• 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
• 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
• 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
• 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

Negotiating Licensing Deals

• 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
• 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

Business Lunch with Roland Frasier : business, licensing, marketing, markets, negotiating, product, risk, show notes
Notes By TD