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Business C-Law

“Business Profit is directly proportional the relationship and profit sharing between Resource Contributors and IP Contributors."

Intellectual Property contributions are contributions that develop the company's product - the strategy, the inventors. These are differentiated over non Intellectual Property Assets:

Resources:

Money $
Facilities
Product
Services
Employees
Machinery
etc.

Intellectual Property (IP):

Technical Strategy:

Techniques
Architecture
Design
Methodology
Manufacturing
Process
etc.

Business Strategy:

Marketing
Sales
Distribution
Manufacturing
Finance/Accounting
Process
etc.

Profit is shared between Resource Contributors & Intellectual Property Contributors:

The Length (Longevity of Business) & Rate of Change in Profit is directly proportional to the relationship and profit sharing between Resource Contributors and IP Contributors:

If Intellectual Property Contributors are not fairly rewarded, the Profit Curve is short in duration, while the Cost Curve typically increases.

If Resource Contributors do not perceive fair rewards before the Business Break Even Point they are likely to pull out and the business typically fails.

The Sharing of Profit - Calculating Contributor Return

Resource Contributor:

Salary for Service
Investment + Interest

IP Contributor:

Salary for Service
Profit - Resource Contributor Share

In simple terms:
You do not want the people who own the business to be sitting on their buts twiddling their thumbs expecting profits to flow into their laps.

You want the people who "make the company", working their buts off in order to make profit for themselves.

This balance must however be carefully managed as often Intellectual Property contributors do not have the financial backing or wherewithal to make the business a success. A delicate balance must be struck realistically rewarding all contributors.

Ever-greening of stock is one method to keep the company in the ownership of the individuals developing the company. This balance is as critical for the Venture Capital Investor as it is for the Inventor.

The STRATEGIZE BOS (Base Option Stock) Program is an advanced method of managing profit distribution while providing an integral advanced distributed management system coupled with powerful motivational tools. Ask STRATEGIZE about our BOS Plan.