I automatically started listing the usual suspects: iMac computer, office furniture, printed inventory--you know, the stuff you can touch, feel, burn. The "real" things.
"Anything else?" he asked.
"Well." I said. "There is my intellectual property--does that count?"
It turns out, it does count. A lot. And I was overlooking it at my own peril.
So I checked with my friend Jason Webb, a partner at Pearson Butler and Carson in Utah who specializes in intellectual property law, and I discovered that the so-called intangibles of my business--the ideas in my books, the terminology I've developed, my leadership processes, my brand and logo, etc--may account for as much as 80 percent of my enterprise's value.
And the same is likely true of your business, too.
Chances are you don't even realize you have intellectual property (universally referred to as "IP") much less know how to protect and leverage it. So, based on my subsequent eye-opening discussion with Webb, here are 3 keys for tending to your own valuable, intangible assets:
1. Identify your IP
Webb defines intellectual property as property you can't touch. The chair you own is physical property. The design for the chair is intellectual property.
Most businesses have intellectual property. The most common examples include your branding; your business model, methods, processes, or systems; your trade secrets; your customer lists; your patents or copyrights; and contracts you have with other people or companies.
Webb recommends taking inventory every year or two by conducting an "IP audit."
Start with a simple question: What is it about your business that's special and unique and that would hurt your business if a competitor had it? When you answer that question, you'll have a good idea of your intellectual property. Next, you need to...
2. Protect your IP
There are four basic ways to protect your intellectual property:
Put contracts around it. For instance, you might have employees, freelancers and investors sign non-disclosure agreements.
Use "warnings signs" like trademark notices, copyright notices, and patent-pending notices to make others aware of something you consider to be your IP.
Use registrations such as an official federal trademark to legally protect your IP.
Monitor the marketplace. Your sales team, for instance, typically is among the first to notice if a competitor is using something you would consider to be your intellectual property. And, as Webb says, "The sooner you act on it the better."
One of the biggest mistakes entrepreneurs make when it comes to protecting their IP is to neglect it over time.
"It's like a baby," Webb says. "A baby doesn't automatically protect itself. You have to pay attention to it."
Missing a deadline to make or renew a registration, for instance, can prove costly. Just ask Catherine Hettinger. She invented an early version of the fidget spinner more than 20 years ago, but allowed her patent to expire without filing an updated improved application just as the product was growing popular. Her invention is resulting in millions of dollars in sales, but very little of it is making its way to her bank account.
3. Explore your IP options
Intellectual property often has value well beyond its initial use, but its up to business leaders to recognize ways to re-purpose it and take advantage of it. For instance, maybe you invented a unique applicator brush for cosmetics, but it also could be used in the medical industry.
Another example is from the music industry, where artists can take advantage of several verticals for royalties if they properly secure the IP rights. They might make money off the song on an album, on iTunes, on Spotify, on movie soundtracks, on commercials, in restaurants, and on elevators.
"Sometimes, more of your money will come from a secondary revenue stream," Webb says, "than from the primary one that you created it for in the first place."
It doesn't have to be an invention or creative piece. Disney, for instance, recognized that their guest service process and professional development programs are so unique that they formed the Disney Institute to teach other companies the "Disney Way."
Here at The Extreme Leadership Institute, we certainly don't own "Extreme," "Leadership," or "Institute," but our particular process for leadership and cultural transformation is ours alone, and, therefore, highly valuable to our enterprise.
Whatever your business does and no matter how it goes about doing it, the point is to value those parts of it that are unique but that aren't physical assets. Start paying attention to those non-thing things, and you may well discover that you're sitting on more gold than those coins you listed on your financial advisor's asset sheet.