bob serling business lunch

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
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Notes By TD

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