Would Licensing Cannibalize Your Sales?

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If you have an established service firm, you undoubtedly realize that you need to invest time and money to create a system (maybe even proprietary software).  It’s part of the ongoing process to be less labor-intensive, become more efficient, reduce training costs, and improve quality and consistency.

Once you do that, inevitably, someone in your firm comes up with the bright idea that your company could have another revenue stream if you license the use of your proprietary software or system to smaller niche businesses. You can’t reach every customer out there and the licensees will pay you for the privilege of increasing visibility of your product/system/ software; which strengthens your positioning as an industry leader.  But you pause because the licensees could actually become direct competitors to you and cannibalize your results.

Some business owners freeze at this point and pull back from the licensing option.  It pays to not freeze. A sales executive and/or informed contract attorney can create territories and spell out the rules to maintain the WIN/WIN situation.

Plus, here’s something else to think about. Could the licensees later become candidates for acquisition when you are ready to expand geographically or accelerate growth? You would be familiar with one another.  Your licensees will have experience utilizing your system which would reduce post acquisition “learning curve” costs. Your firm could represent a marvelous exit strategy for hard working Baby Boomers who enjoyed being your licensees.

For more information about achieving synergies between licensing, acquisition, and strategic alliance strategies, go to www.GrowthStrategistShow.com to download my (date) interview with Robert Digby, CEO of PAY CHOICE.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™.   Ambler is wrapping up her 7th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com .      

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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