Maybe you have plans to expand your business down the road and are thinking ahead to a conversation with the bank about securing a capital loan, or maybe you just want to understand the potential value of your business for peace of mind. Either way, it is important to consider more than just your cash flow or the value of your property or equipment. There are some assets which are less tangible, and many of us might not think to include them as we consider the value of the business overall. This is why it is always a good idea to get profesional advice from experts like Ryan Binkely Generational Equity. Here are two of the less obvious assets that you may have which add up to a company that may be worth more than you knew!
Happy and loyal customers
You should not discount the value that can be attached to having loyal customers. Typical methods of valuing a business often include an estimation of future earnings, and the ability to demonstrate to a potential lender or invester that you have a robust customer base will definitely work in your favor. In order to do this, you should be paying attention to the kinds of data you are currently collecting about your interactions with customers – key metrics include the total number of customers and how many of those are repeat customers. You will also want to show on average what your customers spend, and how happy they are with the service or product, or with the experience as a whole. This sort of data is relatively easy to gather through customer surveys and follow up strategies, and also at the point of sale. Not only should this information be collected, it should also be analysed to look for trends, to identify areas for improvement, and in general to get a sense of what you are doing well, and where.
Happy and loyal employees
It may not be as obvious an asset as customers, but having employees who are happy to come to work every day is a significant source of value for your business. There are several aspects to this. First, hiring and training employees involves time, effort and expense. Particularly if there is a steep learning curve to their position, it may take weeks or months before a new staff member is ready to be fully independent in their job. If that staff member leaves, you need to start over from the beginning. If you think of this process as being an investment in your staff, then you want to do what you can to maintain that investment. Second, happy employees are productive employees – it is a well-known fact that employees with high job satisfaction are absent less, work more productively, and are invested in the success of the business. Third, happy employees help to generate satisfied customers by creating a generally positive impression of the business. In the same way as you should pay attention to your customer database, you should keep a close eye on employee trends – increased absences, customer complaints, or resignations can signal a problem in the workplace that you should resolve as soon as possible.
Treating customer and employee satisfaction as assets will go a long way towards increasing the value of your business.