Building Valuable Business Assets

November 17th, 2018

Building a House a Valuable AssetWhen coaching or mentoring I’m always intrigued as to why people start their own businesses. Over the years I’ve found 2 main reasons; firstly, to generate income and the second to create an asset or group of assets that can be sold in the future.

The businesses I coach are clear that they’re creating an asset to sell but most entrepreneurs aren’t building anything of value. Yes, they work hard, make sacrifices, struggle, dream, plan, and strive, but in the end, it is just a replacement for a salary.

But for entrepreneurs who are building a business to sell, it’s their only objective. Generating a good income isn’t enough because if the business is reliant on you being there, it’s not valuable to sell.

But what is a valuable asset?

It’s anything that someone else wants to buy. For example, if you run an online shop selling fishing tackle then valuable assets would include:

  • your systems and processes
  • your database of actively purchasing customers
  • people who have signed up to a newsletter even though they’ve not purchased
  • the brand
  • the domain names
  • social media accounts with followers.

You might have designed your own products so that’s valuable and even more so if you have registered it.

All of that is valuable and has a price. When selling your business, the buyer is buying the assets which has a value to them and that value might be much greater that a profit valuation.

Selling a business is the same as selling your house. It’s only worth what someone is prepared to pay for it. Value comes from assets. You add assets to your house with a new kitchen / bathroom / conservatory or garage. So, make sure you add assets to your business.

I’m a great fan of 24 Assets by Daniel Priestly – it’s an excellent read and drives home the asset building message.

If your plan is to sell the business, then today is the day to start building value that you can sell.

That means developing new assets and harnessing those you already have but may have overlooked.

Don’t forget that assets are crucial whilst you run the business not just when you come to sell it. Having the assets in place, protects your business through its ups and downs and will consistently contribute to the overall success of your business and be a key part in its growth and success.

Time to think about the valuable assets you already have in your business, and those you need to focus on.

 

coachSME88

Shirley Mansfield is a highly experienced business coach and Master Problem Solver. With over 25 years’ experience, she founded CoachSME in 2011 to work with business owners to maximise growth, and she is still trying to reduce the 14 handicap! Keep up to date by following me on Twitter @coachsme