What is your business worth? If you haven’t done a formal business valuation to find out, you’re not alone. But if you are considering bringing on partners, investors, applying for a business loan or expansion, you should know the value of your business.
Business valuation includes both, tangible assets; physical products and intangible assets, namely your intellectual property (IP). Here we’ll focus on how you can add more value to your business by identifying your IP and then how to take steps to protect it.
Below are the four main categories of your company’s IP.
Your Secret Sauce.
Whether you know it or not, your business most likely has a secret sauce that make your business special. This could include a list of top customers or the suppliers you use, the combination of which give you a competitive edge, even to an actual methodology that you use that nobody has been able to replicate. Identifying and protecting your secret sauce is crucial.
Your secret sauce is probably not just one thing – it’s probably several different factors. The important thing is to identify them and make sure competitors can’t steal them from you. The good news is protecting your secret sauce is free. The legal term for your secret sauce is called trade secret – and there’s no requirement for government registration to protect trade secrets. All you need to do is take clear actions to keep it a secret.
Your Original Works.
Every business has original works, or expressions, that are distinct to them, whether it’s your website, blog, newsletter, customers scripts, online course structure and content, designs or images. Your original works take a lot of energy, time and money to create, so you want to make sure nobody else copies and makes money off of them. You can safeguard original works with copyright protection. Simply discovering and documenting your copyrightable assets can add value to your business.
While U.S. copyright law provides automatic protection as soon your original works are put out into the world, copyright registration is one of the cheapest ways to protect your IP (where applicable) and provides additional legal benefits such as potentially being able to get three times the amount of money in court plus attorney’s fees. Also, copyright registration is required to be able to sue someone for copyright infringement in federal court.
Your brand is probably the most important asset of your business. A brand includes both your company name and logo, and your tagline if you have one. Your brand is the reason people recognize your products or services in a saturated industry. Your brand includes all of the goodwill that goes along with your name, logo, and tagline. The goodwill is actually a huge part of what makes your business valuable. Brands are much more than identity – brands are the way audiences experience your business.
Make sure to protect all elements that represent your brand. If you’ve done your job right, there will inevitably be people who want to make money off of the goodwill you’ve spent so much time, money and sweat building. While there is a chance you have some legal rights to your name or logo when used as a trademark in the states you’re selling in, registering your trademarks with the federal government will provide much more certain and greater protections for your brand.
Relationships and Technology.
Business and legal relationships you’ve created are extremely beneficial for your business valuation. If you’ve created joint ventures, licensing agreements, royalty agreements, and other relationships, make sure to valuate and document them in your overall IP portfolio. Same goes for technology you use such as your domain names and social media accounts.
If your intangible assets are valuable to you, financially or otherwise, or if you feel you need to protect your intellectual property for legal reasons, then taking some time to write all of these things down and secure them is definitely worthwhile. If you decide you want a structured documentation of your IP portfolio, hiring an IP attorney who understands your business is wise.
This article has been edited and condensed. Disclaimer: This article is for informational purposes only and no attorney or client relationship is formed by or through this article. It is not legal advice.
Jana Gouchev, Esq. is an intellectual property and business attorney, and the founder of New York-based Gouchev Law. Jana is counsel to start-ups, fashion houses, celebrities, coaches, high-profile health & fitness experts and creative professionals. She works with visionaries to help them use the power of law and savvy business strategy to create profit powerhouses. Connect with @GouchevLaw on Twitter.