Budding entrepreneurs often focus on the growth and assessment of the tangible assets of their businesses; assets like inventory and revenue. However, it is crucial that they identify and pay attention to their intangible assets, as well. Intangible assets can add tremendous value to the net worth of businesses. Recognition and valuation of intangible assets will be critical factors when it comes time to seek financing or report to stakeholders. Intangible assets will also be reviewed by acquisition teams when it comes time to sell businesses.
The list of intangible assets includes brand-oriented intellectual property (IP) like logos, slogans, packaging design, website design and graphics. Intangible assets include support IP like patents, software, databases and web URLs. They also include non-IP related assets like customer perception, social media accounts and brand value. These are intangible assets that make and sustain a brand. Brand value is arguably one of the most important intangible assets businesses can have.
According to Brand Finance, a premier global brand evaluation company, 62% of the world's business worth (approximately USD 19.5 trillion) is now based on intangible assets like brand value. Brand Finance estimates that Apple, currently the foremost brand in the world, has a 2012 brand value of USD 70.6 million or 20.2% of the company's total worth. Brand Finance also estimates Starbucks' 2012 brand value at USD 6.8 million. That is 27.3 % of the company's total worth.
This eye-opening data shows that entrepreneurs should focus on building brand value from day one of their enterprises. Strong brands with many loyal customers are not built overnight. It is important to develop a strategy over time to increase the value of your brands. This can be accomplished by nurturing the other intangible assets that go into creating and sustaining brand value like customer perception and social media accounts.
Intangible assets can contribute a significant amount to the net worth of businesses. Therefore, early in the business life cycle, entrepreneurs need to identify the intangible assets of the businesses they create. These intangible assets must be tracked and nurtured along with traditional tangible assets. Intangible assets like logos, software and customer perception are all valuable components in building and sustaining brands. When the time comes for financing, stakeholder accountability or future acquisitions, intangible assets will play a significant role.
© Zawya BusinessPulse 2014
