Get the right Rights for your business

When building your Rights assets, it can be helpful to think of it as a portfolio. Your portfolio needs to suit your business model. Let’s look at some of the different forms of rights and how they might fit into a business plan.

Externally acquired rights that secure your access to assets, cash or opportunities give you leverage in the market – with a lower entrance fee. They also form a category of intangible assets which we call Rights. 

So, what kind of Rights are out there? And which Rights will you want to add to your portfolio to drive your business’ value and growth? Here’s an overview. 

• Leases. For businesses reliant on physical spaces for goods, services or people, securing favourable lease terms is vital. Negotiate longer lease durations to ensure stability and avoid the risk of sudden relocation. Consider options for renewal or expansion clauses to accommodate future growth. Location can be a critical source of value in leases if you need to consider foot traffic or the demographics of local shoppers. In services-aligned business models, location can impact brand value. 
• Licenses. You can obtain licenses over valuable assets owned by other businesses, for example, the right to sell a product or service. Exclusive licenses, or partial exclusivity, provide an even larger competitive edge by restricting others from accessing or utilising the same resources, technologies or markets. If the licence is for a product or service that’s in high demand in customer segments you already engage with or are strategically targeting, this means an even higher value.
• Service and product supply contracts. Securing long-term service or supply contracts with clients is crucial in most business models. Contracts establish a steady income stream, provide revenue visibility and reduce the risk of customer churn. Long-term service contracts make your business more attractive to investors and buyers by ensuring stability and predictable cash flows.
• Subscription-based models. This is a right to future cashflows by means of a contract with your customer. Subscription-based revenue models can be worthwhile if they align with your value proposition. They can enable you to secure recurring cashflows, providing stability and predictability, which investors and buyers appreciate. You might be surprised how many business models – even outside of tech – are suited to this type of pricing option. 
• Supply chain agreements. The security of a long-term supply contract with trusted partners is a common business Right. It ensures a steady and reliable source of whatever it is you need to create your products and services. These agreements provide stability, reduce supply chain risks, and enhance your business value by securing future cashflows. Yet, it’s not without risk: this kind of Right needs proactive management in how the agreement is structured. For example, avoid locking yourself into the obligation to purchase an oversupply of materials or services in the event of a downturn in the market, or committing to high input prices when market pricing drops. A supply chain contract that doesn’t consider these risks may damage your business value.
• Distribution agreements. Businesses that get physical goods to physical destinations are in distribution. These businesses benefit from securing exclusive distribution agreements with effective distribution partners. Distribution agreements that grant your business a limited or exclusive right to a channel to market, a network, or a customer base are the most valuable. These agreements create barriers to entry for competitors and solidify market dominance. In the digital space, these kinds of agreements are harder to secure on an exclusive basis. However, distribution rights for brand and marketing content, while less directly linked to revenue than for product distribution, hold similar value potential, learn more about creating Brand Equity here.

Driving the value of your business up, fast

Securing the right portfolio of Rights has a substantial impact on your business’ total value. Investors and buyers are inherently (and understandably) more attracted to businesses with stable revenue streams, documented competitive advantages and strategic flexibility. Rights that guarantee future cashflows, such as long-term service contracts, revenue-sharing partnerships and subscription-based models, enhance the predictability and longevity of a business's earnings. When competitive advantages are written into legally binding contracts, this offers an instant reduction of risk. 

Rights such as exclusive licenses, options and distribution agreements contribute to your market position and growth potential. The ability to control and access key resources, technologies, or markets through a strategic portfolio of rights gives you a distinct positioning advantage over competitors. Even if you don’t have cashflow from those rights today, your business will be more poised for market entry and growth when the conditions are right. This potential for growth and smart market positioning factors into your business valuation. The only test is whether the portfolio of rights that you’ve secured are the right strategic fit to your business model.

Regular review pays off

A strong rights portfolio will benefit your business both now and in the long-term. However, this is not a one-and-done process. Securing Rights of all kinds should be a core feature of your business planning cycle and long-term strategy. To stay ahead of the game, regularly assess your portfolio, review and update your agreements, explore new opportunities for rights and adapt to changing market dynamics to ensure your business remains competitive and increasingly valuable.

Learn more about the four ways Rights can benefit your business.