Network: September 1991
Earl Fredrickson has obtained marketing rights to a computer-managed fertility monitor. He asked how he could best market it to OB/GYN doctors, and whether he should sell or lease it (The Temperature's Rising, June 1991, [Article link]).
Better results for patients and a new source of revenue for the practice will get a doctor's attention. That's what Mr. Fredrickson should stress in his marketing. Because infertility treatment isn't well covered under most health-insurance plans, the cost will come directly from the patient. The potential profits from rentals are huge. All of that will go nowhere, though, if Fredrickson can't point to clinical trial results showing his technology's superiority.
Jeffrey J. Denning
Long Beach, Calif.
As he and his wife approach retirement age, Louis Lorenz has to find a buyer for the business that has been in his family for 80 years. He wants someone who will carry on traditions, and he's afraid the business-opportunities pages or a business broker will expose him to "get-rich-quick" types (We Are Family, May 1991, [Article link]).
If Mr. Lorenz has met potential successors but hasn't been able to make up his mind, he should consider bringing those candidates into the company to help out, either part-time or full-time. That way he can see how they interact with employees. Mr. Lorenz should also recognize that someone may really care about his business but may set goals for it that are different from his.
I hope Mr. Lorenz is sincere in his wish to carry on the family tradition, and recognizes the price he may pay. More than once I have made an offer to buy a business, have been told that the owner and employees agreed I was the candidate most likely to carry on traditions, and then have seen the owner turn around and sell the business to a higher bidder. And that happened in small midwestern cities, far from the "get-rich-quick" types Mr. Lorenz fears.
Edward W. Eick
Consultant and Owner
Reliable Motor Supply
Grand Rapids* * *
Licensed to Bill
Working as a government engineer, Gregory C. Hildebrand invented several high-tech devices that he can now license to private industry. He's not sure, though, how to put a price on the dollars saved and the capabilities gained with his products (Government Issue, June 1991, [Article link]).
Available accounting techniques can reduce those intangibles to a reliable royalty base denominated in dollars. A running royalty with periodic payments proportioned according to use gives the licensee some incentive to arrive at an accurate measure of use.
The cost of licensing work will probably be a bigger problem for Mr. Hildebrand, especially if each of his licenses includes different terms. He could ask each licensee to pay the cost. Or he could draft a skeleton agreement containing terms common to all deals and then ask each licensee to fill in the blanks. Mr. Hildebrand could then simply scrutinize the supplied terms to make sure they're reasonable.
Michael J. Ure