It can be exciting to license your business because it is a big step in the right direction.
But you need to evaluate your business before you opt for that business license. If your business is barely making it, it may not be a good idea to move toward licensing your business because licensing takes money.
If you think that licensing your company is the way to cure bad business, think again. It is not a way to create padding at the bottom of the barrel. As a matter of fact, it can cause you to hit the bottom of the barrel harder.
Licensing works well for manufacturing businesses where brand recognition is what makes or breaks the business. Even businesses such as auto shops and hair salons can benefit from licensing their business because we live in a society where people are more likely to spend their money on a brand name, even if at the community level.
As for how licensing works, you want to be able to obtain brand name items to sell. For instance, a hair salon will want to sell Paul Mitchell products. However, a clothing store may not be able to obtain a license for "L.A. Blues" because it is exclusive to Fashion Bug stores.
Nevertheless, licensing allows you to hang signs on your door or around your establishment that shows you carry a particular brand. You can also choose to license your business with new and upcoming brands so that you can be one of the first to carry it. You can become more successful through branding.
How to license your business
You can contact a licensing agent. This agent knows which companies are looking for people like you. You can check out the International Licensing Industry or the Merchandisers' Association website. These two websites lists agents and a lot of general information that you can use.
Now assuming that you have found a company you want to license with, obtain the assistance of a lawyer to help negotiate the deal. You will want to pay special attention to royalty payments paid by the licensor and the minimum sales that they require. Make sure that the minimum sales requirement is something you can pay even if you don't meet that requirement.
When going through the agreement, ensure that you read all of the small print so that you are not trapped into something that you cannot handle. The last thing you want is for legal trouble to destroy the business that you are working hard to build. Branding is just one of the ways you are trying to build it. There are other steps you have taken and you don't want to lose that progress.
If you hook up with the right brand, you can become even more successful rather quickly.