Is your small business on track to succeed? How do you know? How do you communicate that knowledge to stakeholders? It turns out that the answer is found in how well you understand your business’s intangible or strategic assets—those assets which you cannot see or touch, but are powerful enough to trip you up if you miss them.
Intangible assets are essential for a business. Here’s how.
Brand values as intangible assets
For years, Microsoft was Bill Gates, just as Apple was Steve Jobs. They created their respective company—and the value of its brand. Now those are in the hands of their successors, Satya Nadella and Tim Cook, whose job is to retain the value of those brands now and into the future.
As you grow your company, keep in mind that to become sustainable over the long term, your job is to build a brand that has lasting value. That value may be embedded in company trademarks, patents, and copyrights; or secret sauce like customer lists; media mentions; and more.
- Attract and retain loyal customers;
- Translate into market share;
- Help distinguish between sustainable and unsustainable enterprises; and
- Attract shareholders and investors.
Although few company brand names become a synonym for the product (Kleenex, Xerox, Jello) or a verb (please FedEx this package), brands have significant value even for small businesses, especially in forecasting sales and sustainability. PS the synonym actually means that you lose your trademark rights because your brand has become generic!
Key human resources as intangible assets
Leadership: Leadership is an intangible asset that guides employees to understand your company’s values—from focusing on what customers want to embracing risk-taking and innovation.
Beyond leadership: Ask yourself, beyond your company’s leadership positions, which job functions strategically contribute to your bottom line?
Companies create intangible asset value by identifying the right key roles, or job functions and then hiring personnel with the right skills, values, and outlooks.
- For example, if you are in the restaurant business, your head chef creates value by developing menus and recipes that attract and retain customers. Hire the right chef and voilá, the customers come. Hire a chef whom the rest of the kitchen staff cannot work with and chaos follows.
- At a hotel, the concierge role creates value by going above and beyond basic services to give customers what they want. Hire a resourceful, customer-focused concierge, and you find yourself with repeat business and word-of-mouth marketing. Hire the wrong concierge, and the word will get out. Omit the position all together, and you will need to analyze whether that is saving you money or costing you customers.
- The position of Project Manager (PM) increasingly is becoming an invaluable asset to companies that rely on project teams. It turns out that the PM role is key to successful innovation and customer satisfaction, especially in IT projects. That makes talented PMs highly valuable intangible assets.
Building these intangible assets—hiring the right skilled people for the right roles, and then making sure those people understand and are prepared to personify your company’s culture and values as well as perform their job descriptions—is the road to success.
Goodwill and customer loyalty as intangible assets
Is your culture focused on customers? That in itself is an intangible asset because a customer-focused company culture generates goodwill.
What exactly is goodwill? Findlaw defines it as “a measure of your company's reputation, and of how willing these individuals would be to continue doing business with your company.”
Here are a few examples of what generates goodwill:
- An easy product return policy and process.
- An airline that continues to offer snacks when the competition has a “no frills” policy.
- Local companies that support charities in local areas.
- Trust gained through partnerships, relationships with suppliers, and work with community or government agencies.
- A reputation for expertise, exceptional service, or consistent high-quality products.
In a monopoly situation where customers have no option, goodwill has less value. In today’s competitive business environment, however, goodwill can help your company stand out. It tends to have a significant impact on your ability to attract and retain customers, and therefore on your bottom line.
Findlaw lists a range of intangibles, all of which play a part in creating value for your company. Think about it this way: anything your company has developed, contracted, licensed, and/or transformed—anything that has contributed to your bottom line—is likely an intangible asset.
Measuring and monitoring just your tangible assets, while important, does not communicate the value of your company or provide information on whether it is strategically positioned for success.
Identifying intangible assets is the road to success. Managing those intangible assets keeps your business on track for sustainable success.
Savvy stakeholders know the true value of intangibles and will be watching to see how well you know that, too.
Traklight is a leader in assisting startups and small businesses in identifying and protecting their intangible assets. For a more in-depth look at how to protect and retain your company’s value, contact us today.
Dont miss our webinar "IP 101: Why Care About Intangible Assets" this Thursday! Register here.