When I ask business owners what they want in the future the answer I frequently hear is, “I want more money!” My response is, “The value of a business can be way more than money in checking and saving accounts.” Value is not one number. Value is a perception by industry professionals or an emotion customers feel about a product or a company. I looked up the definition of value on Visual Thesaurus which uses visual maps to define words.
The range of words included in the visual definition of value were:
- Appraise – Measure – Evaluate
- Worth – Economic value – Treasure
- Prize – Esteem — Respect
Value of a business can refer to the sales prices of a business. Valuing a company for sale is a complex process. The customer base, annual sales, customer lists, profit, physical assets, products, intellectual property, location and local household incomes are considered in estimating the sales price of a business. Companies specialize in evaluating these tangible and intangible value elements.
The CraneWorks looks at value as a creative process across the whole company. Efficient operations with low costs are important to aim for. But what must the company invest in products and quality to satisfy customer needs and quality? To answer these questions understanding the emotional elements of building a value creation mindset across a company is important. In the current environment, consumer purchases are emotional and shifting rapidly.
Consider the desires of customers below. Which product do you think will have the highest loyalty and demand?
- I want a pizza NOW – The nearest pizza joint will do
- I spend money to get things I treasure – I only buy Rolex watches
- I come back to my neighborhood restaurant — It reminds me of home
To answer those questions, look at how the whole company responds to customer’s desire to buy. The effort reveals ways to reduce costs and where to invest funds and resources to improve customers’ decisions to buy. Right now, holding customer attention is key to improving the revenue line, the life blood of all companies.