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Email E. Dennis Bridges, CPA

Is Your Business Properly Valued?

“The magic formula that successful businesses have discovered is to treat customers like guests and employees like people.” -Thomas J Peters

How do you set a value on your business?

Here’s how to think about this: Consider not only your immediate short-term needs, but also your long term hopes; and in that process (this is the clincher), very carefully consider the value of the customer or client.

Every business, every product line, every service organization, even if it is distanced from the ultimate consumer by a chain of distribution, is still dependent on an actual consumer for its lasting success.

The greatest asset a business can ever possess is a known list of satisfied, loyal customers.

Recently, I observed a local business that was for sale. My observations revealed that the store’s inventory mix was poorly selected for its primary clientele, which were business people and office workers. Considerable floor space in the store was being wasted and the store did have excellent traffic during the day.

The asking price for the store was a little high (as asking prices usually are), but it looked to me like the numbers could be made to work. But then I asked the problem question, “How many people with their home addresses are on your mailing list?” This store owner (after five years of operating the business) had never bothered to collect his customer’s names and addresses on a mailing list. He had no way to directly reach out to his past and present customers.

He mistakenly thought that the value of a business is its lease, its furniture and fixtures, its inventory, its financial statements.

He didn’t understand that none of those things are worth much without customers.

Now let’s take big business. When you buy a new car or a new stereo or a new appliance you are separated from that product’s manufacturer by a chain of distribution that includes manufacturer’s representatives, wholesalers, warehouse operators, and the store or the dealer.

Yet you probably filled out a warranty registration card and mailed it to the manufacturer. Why is that done? One reason is so that the manufacturer can find out who its customer is. Some manufacturers then use these lists to market. Others just accumulate the data unsure of what to do with it, but at least they *have* a customer list.

As you establish marketing objectives, strategies and the VALUE for your business I urge you to carefully consider the value of the customer FIRST.

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This entry was posted on Friday, January 19th, 2018 at 7:42 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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