We recently held a series of free 30-minute webinars to help attendees grow the equity value in their consultancy firms and prepare for a sale of their business. Attendees at each webinar submit questions, and we’ve been sharing and answering these questions in a series of blog posts. This week we’re looking at the questions asked during the webinar on how well-managed intellectual property (IP) can enable your consultancy to scale and command a premium price at sale.
1. Can you explain further about the need to protect IP trade secrets and yet still provide the depth of information necessary to market the business?
It is important for consultancies to share high-quality articles, presentations, reports and materials with clients and prospects. Doing so will help consultancies demonstrate industry knowledge and domain expertise. A large percentage of your IP should be readily available to prospects and other stakeholders.
But how do you control access to trade secrets? The foremost priority for any consultancy in such a situation is to understand: (a) who needs to know (b) who needs to have access and in what format? (c) who controls the access to these trade secrets? While there isn’t a shortage of senior executives in charge of marketing, operations, etc., it surprises us how many consultancies fail to assign someone to manage IP. Therefore, appoint a senior member of management to control IP and make sure that they come up with a plan to address the considerations above.
To guard against the misuse of IP firms should make use of non-disclosure agreements and non-compete clauses in employment contracts for when employees leave the business. Internally, consultancies should make clear to staff what it considers IP and train them on how to use and store it safely. Then, the company should enforce this rigorously within the organization.
Why not click here to learn more about how to build intellectual property to drive equity value in your consulting firm.
2. How does a firm prioritize ideas for new service offerings?
New service offerings require new IP but creating it takes time and costs money. While you might not be paying any third-party supplier, the consultants you have working on creating the new offering will not be delivering on projects that will actually make the business money.
The way to get the best return on investment is to pay close attention to the market you are entering. Early on, establish how large the market is, how competitive it is and what your right to win new business in that market is. You’ll also need to determine your firm’s ability to deliver on the service and whether or not clients find your offering credible.
Finally, consider the cost of production. Estimate how long it would take to create the new IP and whether or not you will be able to do everything in-house.
Tip: Try to develop a new service line that reinforces your current focus and what your firm does well, rather than diversifying into a new market you have little experience in. And don’t forget to test your new services with clients immediately so you assess the market’s appetite for your services. If there aren’t any takers, kill off the idea and move on.
The second half of the blog will be published in the coming weeks.
If you are preparing to sell your consulting firm and would like to discuss your plans, please get in touch.
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