In the United States, many companies rely heavily upon their intellectual property. As such, companies that build their operations on innovation and intangible assets are more likely to thrive. Your business will not only be more profitable, but it also gives you a competitive edge over other organizations in your industry.
However, you cannot take advantage of these benefits unless you know what your company’s intellectual property is worth. This also means that you cannot protect and capitalize on your assets. Despite its importance, a majority of business owners do not know how to calculate their IP, or at least do not do so accurately. This can have a drastic and damaging impact on a business’ bottom line.
Here is what you can do to begin understanding the worth of your intellectual property.
Conduct an IP Audit
The first step to consider is conducting a thorough intellectual property audit on your assets, risks, and opportunities. These audits help analyze, protect, and bolster your IP, while also correcting any mistakes that were made to your IP rights. An audit will also bring to light any red flags that one company’s products or services are infringing on another company’s intellectual property.
An IP audit takes a look at everything from trademarks, copyrights, patents, domain names, and trade secrets. Conducting an audit will help you understand how you can best utilize and manage your intellectual property for future profit. Since these rights are designed and enforced by the law, these audits are typically performed by a law firm or a specialized valuation firm.
Once you understand the IP you have, you should then get a valuation of your intellectual property.
Advantages of an IP Valuation
Registered and granted IP rights are critical because they prove your ownership over your intangible assets. It is this documentation that is necessary to prevent other people from using your assets for their own profit, which could take away from your own profitability.
Determining the value of your intellectual property is complex, but it is that value that helps you determine the appropriate royalty rates you can charge. An IP valuation does not only safeguard you from your competition, it also increases the overall value of your business. This increase could prove advantageous if you ever need to apply for a business loan. It also gives you leverage if another company wanted to purchase your business.