You’ve come up with a brilliant idea. Really- there hasn’t been a better idea since the Post It. You know that this is going to change the face of ‘X’ industry. Before you can jump into manufacturing, marketing and selling, how do you value and protect it?
First lets examine what intellectual property is:
A Law: Property that results from original creative thought, as patents, copyright, material, and trademarks.
Now what we understand what intellectual property is, we can identify the steps we need to take:
1. Get Legal Advice.
Intellectual property laws are designed to protect those that have come up with great ideas, inventions and materials. These protections come in the form of patents, copyrights and more. These laws are complex and require a lawyer who has been well versed in their uses to to be able to effectively help their client protect their property. They would identify possible copyright issues, figure out how the scope of the protections and more. If you are starting a new company, having someone in your corner who can advise you on the best options and steps is necessary.
2. Find Staff to Appraise the Value of Your Intellectual Property
You want the staff you chose for this role to be well educated about the requirements of your property (known as your idea/invention), as there are different ways to appraise properties and each have the strict guidelines in the law. Your team needs to be able to
- Figure out the idea, the nature and size of the market to be served with your property
- The competitive advantages of your solution
- The price customers are willing to pay for your solution and related value proposition
- Costs of implementing the technology or products
- The impact of the technology on the processes used by the business to service its customers
- Length of time before new competition will enter the market
3. Research Comparable Transactions
Just like with the real estate market, if you don’t know what other homes are selling for, you don’t have the ability to determine how to price your home. This is similar with intellectual property. A good appraiser will have the ability to determine what your property will be worth by comparing it to something that is already currently selling.
In this case it must be apples to apples comparison. If you are selling software, you cannot compare selling a retail product like shoes. Picking an experience appraiser in the field of your property will be vital.
4. Understand the Risks Involved
Like with any investment, you have to consider the risks as well as the gains. You do not want to underestimate your costs, the time investment for the idea (development) or the setbacks that can occur.
Having someone assist you with realistic cash flow, benefits and future investments in the business will help safeguard your idea and its growth.
”Don’t give up; the beginning is always the hardest.” – Kemmy Nola
Intellectual property can be difficult to navigate, but with a basic understanding and a great team to assist you, you can be sure of success. Reaching your goals is possible, and Pacific Crest Group is here to help! Be sure to check out our blog about Reaching Your Goals Through Accounting!
Did you know that one of the first things printed on a Gutenberg printing press was a treatise by Luca Pacioli, one of the fathers of accounting? Originally penned in 1494, it is mind boggling to think how far Accounting has come since that point.
Considering that automated spreadsheet sums weren’t available until the 1970s! This makes the majority of modern accounting practices less than a century old! Before computerized programs all entries had to be written and balanced manually. This was, as you can imagine, time consuming. It also left more room for human error and when mistakes were made, they were often impossible to find! In a large company, the Accounting department was often huge, with each individual being assigned one role in the great machine that kept everything financially balanced.
Fast forward to the 1970s and the use of computers in the workplace. With the wide spread use of MSDOS companies were able use software like Great Plains to automatically input numbers for calculation. As technology changed, so did software. Imagine being an Accountant and starting your career in the 70s. By now, every system you originally learned on is outdated.
What is the point? The point is the value that is to be had with having a partner in account management. No longer are Accountants just crunching numbers, they are crunching numbers, advising businesses on best practices and able to impact their company’s bottom line. A good accountant can be a business’s best friend when it comes to growth. Imagine not being aware of a change in tax law, or that there are new requirements for payroll in your state. Having a team member dedicated to looking out for your best interest can mean the difference between success and failure.
As we covered in our Basic Accounting Principles blog post, there is a lot to cover to successfully navigate the accounting sphere, and that can get overwhelming. Fortunately we no longer live in the age of the printing press anymore and can use the tools that are out there to assist but if you want an extra boost, Pacific Crest Group is here to help!
How often do you communicate with your accountant? If you only speak with your accountant a couple of times per year around tax time, then you may not be making the most of their expertise.
As a business owner, you should be providing your accountant with all of the documents needed to track your past spending and growth. But did you know that your accountant can help you plan for the future as well?
Accountants have the skills to help you set goals and grow your business. Did you know that they can help you even set goals for the next year or even 10 years from now? All you have to do is provide them with additional information.
Here’s a list of topics to discuss with your accountant to ensure that they help you reach your goals.
What’s the end goal for your business?
Every business will have an end goal. A small software startup may have an end goal of being acquired by a larger company. Whereas you may want your small service company to run for the rest of your life to provide you with steady income.
If you’re a small startup looking to get acquired, your goal would be to achieve very rapid growth with little attention paid to profitability. Your accountant would use this information to create financial goals that will help you look more appealing to larger companies.
What type of growth do you want for your company
Some people want to keep their business with only a couple people on staff working out of home offices. Others have hopes of large staff and multiple office locations. Regardless, your accountant can help ensure that you’re spending your money on the right parts of your business to match the level growth that you want.
When do you want your business to be profitable
Depending on the type of business you’re running and if you need investors to get started, you may not be able to be profitable from the get-go. Your accountant will be responsible for determining the distribution schedule and when the company will expect to be profitable for investors.
Additionally, if you’re starting a small business and you have a family and bills to pay, your accountant can focus on improving cash flow to ensure that you get money in your hands as soon as possible.
How much do you want to earn each year
Paying yourself a smaller salary means you can spend additional money on advertising and new equipment, and a larger salary means limiting your growth. However, as a new business owner, you may need the profits right away and won’t be able to put a lot back into the business.
Your accountant can also help you determine if it’s the right time to switch from a sole proprietorship and incorporate your business, or if it’s the right time to hire staff and take a smaller role. Your accountant can help you make the best choices at each stage.
How big of a role do you want to have in your business
CEO, COO, CMO, janitor? Do you want to have this role forever, or maybe even take a smaller role as you get closer to retirement. Heck, maybe you just want to get it up and running and then stay away from the daily operations as soon as possible.
Every business and business owner is different. Some people love being in the trenches day-in and day-out. Others just want to set up a successful business and get out as quickly as possible to start their next venture.
You need to make sure to have this conversation with your accountant, and what possible changes you want to make regarding how much you work, the cost of hiring employees, etc.
Will your family play a part?
Wondering if it’s smart to start a “family business?” Well, there’s certainly some tax incentives for hiring family members. However, having your entire family’s income coming from a single source of revenue cane be risky, and you will need additional help from your accountant to plan for how you grow this company.
Establishing a Partnership
Whether you’re starting your home business or getting ready to create the next big Silicon Valley startup, you’ll never be alone. Part of running a successful business means establishing partnerships with key individuals that can help you become more successful. One of these people will be the person or team you hire to do your accounting. If you share your goals with the right accounting team, then you’ll be able to grow faster and reach your financial goals.
What does it mean to be a small business owner? It means a few things. First, that you have worked incredibly hard getting your business off the ground. And two, that you have probably spent many sleepless nights trying to learn every area of your business including basic accounting principles. If you’re just trying to wrap your head around this three-headed monster that is basic accounting, then this may serve as a decent guide to getting started. Continue reading “Basic Accounting Principles Small Business Owners Must Know” »
Key performance indicators help you measure the performance of your business, and it’s ability to meet goals and expectations. Regardless of your industry, you need to establish key performance indicators (or KPIs) to understand the growth and trajectory of your business. Creating KPIs is more time intensive than it is difficult, and requires you to understand the connection between goals and results. Continue reading “How Do I Create Key Performance Indicators?” »
Business benchmarking is the comparison of your current performance data to either past performance data, or your competitors performance data. By benchmarking your data, you can gain a clear understanding of what areas of your business need improvement.
Continue reading “Using Business Benchmarking to Improve Operations” »
I’m sure you’ve heard of fundraising, but have you heard of crowdfunding? Crowdfunding became a big thing with the rise of websites such as Kickstarter. Crowdfunding is the process by which you raise capital through either donations, or a number of investors. So how can your business benefit from crowdfunding? Continue reading “Crowdfunding and What it Means For Your Business” »
According to a study conducted by Allmand Law, at least 90% of startups fail. The fundraising period for most startups is the make or break period, yet even making it past the fundraising thousands of startups still fail. Continue reading “6 Fundraising Lessons To Learn From Failed Startups” »
Fundraising for your startup can be one of the most important and stressful times. When done right, it can lead to partnerships with angel investors and venture capitalists that lead to millions of dollars to grow your business. If done wrong, it can lead you down a long road where you begin to second-guess your business and model.
Raising funds for your business takes a lot of planning, a lot of patience, and a significant amount of time preparing pitch decks and financial models.
So how exactly do you start to fundraise for your startup?
Continue reading “Fundraising For Your Startup” »