If Robson, Ferguson, Wenger and Magilton were the dragons... - October 2008

Like many Sunday league managers dreaming of the premiership, many business start ups envisage being the next Branson, Sugar or Dyson. Whilst this may be purely fantasy, there are many analogies that can be taken from this.

A new business start up may have few tangible assets but may be built upon and rich in intangible assets. The tangible assets that may be gained include property and equipment whilst the intangible assets that may be lost include ideas, goodwill, expertise and “know how”.

For a business start up the tangible assets may appear straightforward and common sense in that they should be legally recorded and protected since you would not want a competitor walking away with your equipment for free. However, the intangible assets which may be the foundations and basis for the start up are frequently not protected and there may be nothing to stop a competitor from walking away with all or part of your idea and goodwill.

As a Football Dragon, an investor would seek previous success and a large fan base (goodwill), coupled with good employees with ideas and skill. The investor would investigate how well these were protected before considering making any investment. If the fans and skilled employees could be  taken for free by a rival club, then the club would be extremely unstable and the Football Dragon would not invest. If no or little protection is in place, the investor may as well set up his own club rather than invest in an unprotected business.

Similarly, a business start up looking to attract investment and customers will also be scrutinised to see what is to stop an investor or a competitor from simply copying the goods and services of the start up.

The main assets that the start up will have are likely to be intangible. For example, 81% of the £652 million sale of the Body Shop was attributed
to Intellectual Assets.

In many businesses, the unique idea may be encompassed in a product, method or process which is easily replicated. Each product or each use of the method or process should be generating an income for the business. In the football analogy, if the skills of the player could be easily replicated then the leagues would be awash with clones of Pele, Maradonna and Mariner, with just the skills rather than the player being transferred for exorbitant amounts of money. This is no longer straight forward and includes the intangible assets of that player, e.g. the “image rights” to brand
Beckham®. Luckily, in most businesses, the idea is encompassed in a product or service and this means that the business can sell repeat products and services.

The business of protecting intangible assets can appear quite abstract. Intangible assets, by definition, cannot be seen or touched and, therefore, are overlooked until it is too late for protection to be gained. Patent and Trade Mark Attorneys advise both businesses (and investors and customers) as to what protection (Patents, Trade Marks, Designs, Copyright) does or does not exist.

Accordingly, consider all of these assets when assessing how to build and grow your business since businesses include and may be founded upon such  intangible assets which may or may not be protected. The potential investor is more likely to be a Branson expecting a return on his investment rather than a Delia®………!

Originally published in the Suffolk Business Magazine, October 2008