You’ve probably heard about ‘commercialisation’ and wondered what it is and how it even works.
In a nutshell, commercialisation is a process by which a business recognises they have a new product or service and brings its to market. It’s like a pathway to market.
You will most likely hear the term ‘commercialisation’ being spoken with Intellectual Property (IP). IP is essentially a new idea or invention and is an intangible asset. For startups, a person’s IP could be quite valuable. Your IP, especially in the beginning, should really be treated as top secret and confidential, and it’s important to consider protecting your idea. The right to use the IP can be protected in many ways, for instance through a non-disclosure agreement or a deed of confidentiality. This is particularly critical if you intend on filing for a patent or design.
It is important to recognise that a commercialisation strategy will encompass most areas of a business and requires a sound strategy that touches on sales, marketing, distribution, production, growth and overall profit and loss.
Commercialisation Journey: The Crux
- Brainstorming
Who doesn’t enjoy some creative, out-of-the-box thinking? This phase is where you can brainstorm, sketch and map out your new product and service. While your head may be brimming with great ideas, you should aim to narrow the focus down to one or two ideas that spark interest. Consider the idea and how it might plug a gap in the marketplace or solve a common problem. Your idea requires a customer base, so it’s good to remember that it needs to be saleable.
It’s best to undertake some preliminary research to make sure that there are no other people or businesses that have already thought of your idea, produced it and otherwise own the patent or design to the idea.
This phase may explore how your product or service will function and work, which may include creating a prototype. Ask yourself the following questions:- Is it possible to create a mock-up or prototype?
- Do you need to protect your IP before anyone sees or finds out about your new product or service?
- Have you tested the product?
- Do you require any certification, approval or registration?
- Have you mapped out how your product works or created any manual/support documents?
- Business Planning
Once you have firmed up your new idea, product or service, the next step is to draft a business plan to clarify and validate the opportunity, help guide the progress of your new business, assess the market and map out the expected costs involved in your journey ahead.
A good business plan should be comprehensive but flexible and addresses your idea, the goals for your business and the vision that drives your strategy. Hopefully, by the end of this phase you should be able to formulate your elevator pitch and explain what your ideas will look like, why people need your product, your difference over competitors and how you intend on selling it.
You may wish to ask yourself some of the following questions to help you plan out this pathway to commercialisation and asses its financial viability:- Who is your target audience? Why would they buy your product or service?
- Is there a clear gap in the market? If there isn’t, what is your unique selling point?
- Do you have a ‘first to market’ advantage?
You may find yourself considering how you can further develop an idea through collaboration with research and development organisations or technology-based incubators and private innovation companies. This is what is known as sourcing IP and involves connecting and exploring ways to capitalise on the strengths of others (while keeping your IP protected).
- Business Structuring and Commercialisation Vehicles
Once your business plan has been formulated, you will understand where you are currently and your end goal. A topic that may not be touched on in your business plan is how you intend on holding or owning the idea, product or service, and this is where business structuring and commercialisation vehicles come into the picture.
You should consider what structure of a business is most appropriate for your new idea. This involves considering what risk is attached with the product and service, whether you require finance to fund it or if you plan on applying for a grant, and whether your own personal assets require protection. This all can be achieved through business structuring and asset protection planning. Lawyers and accountants can help and guide you through this process, and can even set up a company or trust.
When we talk about vehicles for commercialisation, we are talking about ownership and conveying of the IP during the commercialisation of your new idea. These vehicles may include:- Selling your IP through assignment – basically, transferring your ownership in your IP to another person for money.
- Creation of a new entity or structure – most startups fall into this category whereby a new entity or a new business structure is formed specifically to commercialise the new idea.
- Using an existing entity or structure – this may be perfect for an existing business with their business structuring in top shape who are looking to exploit their new idea.
- Licencing – a common method of commercialisation is to licence the IP to another entity and not sell it. This is achieved through a licence agreement and allows the owner to have some control over the new idea.
- Franchising – a more sophisticated way of commercialising a new idea which incorporates a franchisor and franchisee and a franchising agreement. It allows the licencing of trade marks and business systems and processes from the franchisor to the franchisee. There is much regulation through the Franchising Code of Conduct to consider if you explore this option.
- Merging with an entity or acquiring an entity – this is where two entities combine into one and is usually achieved by acquisition through an ownership take-over. This will typically mean that all the assets and IP of the two entities become one as well.
- Joint Venture – this is where two entities combine their powers to commercialise a new idea together while remaining separate entities with no ownership changes.
As you’re working through the different ways and vehicles that you can use to commercialise your new idea, product and services, it is essential that your business structuring offers you and your business the best protection. Consulting with professional advisors at this juncture is important.
- Thoughts into action
This is not the time to file your business plan and commercialisation strategy in the bottom of your desk and forget about it. How you implement your business plan may start with simply speaking with your professional advisors about your idea, what your end goal currently looks like and asking for advice on the best ways to move forward whilst remaining adequately protected. There are resources available online, including templates for business and commercialisation plans, to help ease the overwhelming feeling of taking that first step. The most important part is for you to take that first step and the rest will follow.
Full steam ahead on your commercialisation journey. IP remains a common thread in the commercialising space with protection the key before disclosing your idea to anyone. The team at Bolter understand that commercialising a new idea, product or service is daunting, particularly when funds are tight. We can get you started with a good understanding of commercialisation and the legal risks concerning your new idea, and offer you certainties around the costs you can expect moving forward on the pathway to commercialisation.