What Are Your Most Valuable Business Assets?
Your Most Valuable Assets Might Not Be What You Think
Business owners, I am going to tell you something you're not going to like to hear... Maybe you have heard this before, maybe not… but it is important for you to be thinking about what your business is worth right now… so at that point in the future when you suddenly decide it’s time to sell you will know exactly what your most valuable assets are, and how much your business can sell for.
You hear rants about putting customers at the centre of your business and creating a remarkable customer experience. I firmly believe this is important to a successful operation, but it’s not the only thing.
Here’s the truth… Customers should NOT be the sole focus.
A business without customers is worth nothing. While I don’t suggest getting rid of your customers, they shouldn’t be your sole focus.
Your customers alone aren’t the most valuable part of your business. Goodwill is getting cheaper because the value of a customer list alone, is falling.
The intangible value of your business is demonstrated through a combination of following:
Processes
People
Systems
Physical Assets Vs. Total Market Capitalisation
Look at the top-200 companies on the Australian stock market: the net tangible assets (physical assets owned) of the companies shows a certain value. Then, look at their total market capitalisation (or total business value). This equates to a different value. The market values the businesses at more than the net physical assets owned.
So, the additional value is what (let’s call this ‘X’ value)? You can't see or touch it. You can't sell it on its own.
However, working in your business, in conjunction with each other and the physical assets - this is your X factor. The premium someone would be willing to pay for your business, because it all just works.
Processes hold the true value in any business – it’s the conduit of interaction between your customers and employees.
Consider This…
You can have a million customers, yet with poor processes in place, you will create a mountain of work. If you don't have documented and repeatable processes, you will not be able to provide a remarkable customer experience.
You can hire the best and most talented people in your industry. This will cost you an arm and a leg not just this month, but months on end.
You can keep your existing customer base and your existing staff - they have been working so far.
OR build defined and repeatable processes so everyone knows their role.
The Key is Niching.. or Learning How To Say No
We have discussed this in another recent article: This One Word Should Be Your Best Mate If You Are Serious About Scaling…
Narrow your business’ focus and do a few things very well.
Document the process and build a machine that hums. Gary Keller calls this “niching”, or doing fewer things for greater effect. He says, successful companies define “what’s our one thing?” then they drive a singular focus to the specialty.
Can You Take Yourself Out of the Equation?
To reveal the true value of your business, walk away. “How would your business fair if you stepped back and let it run itself?”
What was your answer? Are you the key to your business?
I hope not.
Because if someone wants to buy it, they are not buying you, they are buying your business.
In fact, if you are the driver of your business, you will be working for the rest of your life. Martin Norbury, author of I Don’t Work Fridays said it best:
“To grow a business successfully you need to let the system deliver the excellent result – not the people.”
So, what is your most valuable business asset?
If it’s yourself, you may want to re-strategise. Talk with our team at Nine Advisory today. CLICK HERE to get in touch.
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