What do you think of when you hear mention of business “assets”? Probably what most people think off—that is actual physical items, such as equipment and real estate; tangible items. But intangible assets are assets that can include copyrights or trademarks, brand identity/loyalty, reputation, social media following, database lists, etc. and these also play an important role in the valuation and sale of a business.
It is assets like these intangible assets that nearly all businesses have, even if said business only exists on real estate located in the World Wide Web. The success of your business is determined upon building up your assets, and so frequently it is easy to forget to include these intangible assets in our idea of success.
Something that is intangible is, by definition, hard to measure. Thus the psychological conundrum of the entrepreneur when confronted with business challenges that all business owners will face from time to time—be it property damage, equipment maintenance costs, increase in overhead, or bad employees. Recognizing intangible assets will not only be of benefit to your self worth, but it will actually help you build value into your business that is very real if you should ever decide to sell or leverage your company in any way.
First thing is first, you need to identify your intangible assets. It is extremely common to conduct an inventory of equipment or real estate, but what else does your business offer that is of importance? Do you have intellectual property? Have you considered the value of existing contracts, or long term contracts with loyal clients? Do you have partnerships with other businesses? What about Internet domains and established social media presence? Essentially, any non-material asset that is responsible for giving a boost to your company’s success and value is worthwhile in this exercise.
Next, document these assets’ impact. The value of any asset is limited to its ability to generate bottom line outcomes. This is especially true when it comes to assets of the intangible variety since many of these assets don’t actually have any value outside of the context of the business itself.
Documenting the impact will demonstrate worth—not only to prospective buyers, but it can also impact your impression of your own business favorably. For instance, loyalty metrics illustrate the value of customer relationships. Or sales tied to proprietary processes show the value of your specific intellectual property. As much as it is important to document all of these assets and processes, it is equally as important to standardize them. Create a standardized process that will achieve similar results that is easily leveraged by anyone that should enter the company. Highlight how these assets are integrated into processes that rely on key employees, other tangible assets, and resources that will endure through the lifecycle of the company.
Through all of this, don’t forget that it may always be possible to create new intangible assets or increase the value of existing assets. You can even take opportunities to make intangible assets more tangible by securing patents for processes or systems that are unique to your company.
I think that it is particularly important to remember these things as an entrepreneur forging an independent path. As I well know, it can be so mind bogglingly overwhelming confronting all of the challenges that come along and it is easy to lose sight of these intangible things that actually point to our success! In my book, F Words for Startups, I talk about how damaging fear can be and how it can play into failure to launch—getting wrapped up in your roadblocks and not pausing to recognize the successes that you have created for yourself or through your team, is creating an even greater barrier to your continued forward momentum. Take a minute. Remember, you are not alone—you can do it.