How To License Your Successful Concept

Any study of Japanese big business has shown that they strive for incremental improvements in various aspects of their business. The concept is known as kaizen and was introduced to Japan by the American change expert, Deming, shortly after World War II as a way to help the Japanese economy get off the ground.

Every business has many processes in the daily action of growing and maintaining. Every process can be measured and improved, then learned and used by other people. The secret is to look carefully at your business and find at least one area that you're doing much better than others. This becomes the concept that you can license.

Not many businesses can find this missing piece, but it's something that you should strive diligently to find. As you will see below, it can have a dramatic impact on your business.

If someone came to you and said, "I have discovered a concept by which you should be able to grow your business by x dollars. I would like to offer you (or license to you) this concept for your use and all I ask is that you give me y dollars per month (which amounts to perhaps 10% of x)."

Licensing your successful concept could add more to your revenues than any other idea in the areas of marketing, so it's very important to take a detailed look at your business.

Let's say that you know that there are 100,000 similar businesses to yours in the country. Through testing you find that approximately 1% of these businesses will "rent" your idea from you for $100/month. (This is just an example; study your industry and determine your potential.)

1% of 100,000 equals 1,000. 1,000 businesses paying you $100/month is $100,000/month. As long as your idea is enduring and useful to the other businesses, and as long as you continue to provide exceptionally high quality in your services, your profits will continue.

The owner of a car wash in America found a way to up-sell his customers to the hot wax option that cost an extra $4 or $5. He became so successful at up-selling this option that he wondered if he could "sell" the idea to other car washes.

So he wrote all the other car washes in America a letter and about 1,000 of them agreed to use his idea for a simple $100/month. Do the math!

Do you think that the $100,000/month he made from licensing his concept was more than the actual profits from his car wash? You bet it was!

The point of this (true) story is to get you thinking. What about my business is performing significantly above the level of other businesses in my industry? If you have something of significance, perhaps you can sell it to other similar businesses outside of your competitive area.

What is the key here? It's your ability to market an intangible concept. Then you must show the beneficiary how they're going to profit, and how they can do it without risk.

The great thing for your business is that you don't have to find an idea that your business is doing well. You can find a concept that someone else is doing well and then you say to a business owner, "If I could show you an idea to increase your revenues, would you pay me 5% of your increased revenues?"

Then you lock them in with a signed agreement before you reveal the idea. It may take a few months to see the money roll in, but it could make you a lot of money if you structure it well.

Final warning:

This is one of the main reasons that you must track all of your actions for your marketing. If you don't track your actions, how can you sell what you have? You will need your "before" story and your "after" story as proof that your "new and improved" actions have made a difference to your profits and your numbers must be specific and verifiable.