Is Your Intellectual Property Valued?

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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!