WE’RE OFTEN TOLD that all our assets exist on the balance sheet: Inventory, Bank Balances, Equipment, etc. that we own. We’ve noticed, however, that some of a business’s most valuable assets are the ones that aren’t listed in the financial accounts. Here are a few of the key ones that store owners often overlook.
Relationship Capital: Chances are you’ve spent years building up a loyal customer base. Many of your best clients come to you again and again because of the trust you’ve developed with them over time. This is an intangible asset that is hard to value but is priceless in terms of the sales you achieve. It is also priceless in terms of how you can grow your business. When did you last ask these clients what they need? When did you last ask how you can help more? The solution to more sales is often at the end of this question. Relationship capital can extend to your vendors and staff as well.
System Expertise: Sure, not everything is perfect and there’s always room for improvement and refinement … but chances are you have developed some effective systems that work well for your business, saving you time and enhancing the quality of the services you deliver your customers. These should not be underestimated. You’ll probably put a value on this if you were to sell your business, so it’s important you appreciate and protect this asset now.
Reputation: Those five-star reviews on Google? You earned those. Customer reviews are often the first port of call for customers seeking a product or service solution. The quality of your service and product offerings has contributed over a long period of time to this status. Don’t underestimate how difficult it is to build a brand or reputation and maintain it. As Warren Buffett famously said, it can take years to build a reputation, but it can be destroyed overnight.
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Data: Let’s assume you have achieved a healthy business with strong customer loyalty and a great reputation. Let’s say also you’ve had a great track record of buying and selling popular product lines. Let’s assume both these factors depend on you, then suddenly you are ill. You need someone else to grab the reins. Where do they begin? How do they know who those great customers are? How will they know what product lines are necessary to sell well? Data is an often forgotten aspect of a businesses value. The more information you have about your customers through your CRM system and the greater information you have about what sells well, the better chance you, or someone standing in for you, has of repeating the process again and again. Your information systems are an asset often forgotten about and not included in the annual financials your CPA prepares for you. This doesn’t mean they aren’t critical to your business success.
Each of these ‘hidden’ assets are an important part of your business. They are also the source of much of your future growth — if you choose to value them and use them wisely. You don’t need to reinvent the wheel — you just need to use the one you already have to its full potential.
