Your Business is an Asset- Treat it like One!

What are the differences between a Business, a Job, and an Asset?

Business: A business is an integrated set of assets and activities capable of being managed to provide a return to its owners or  to create economic benefits,  such as revenues or lower costs for the owners.

Assets: An asset is a tangible resource that retains value after a year or more. The best assets grow in value over time, but some lose their value too.

Job: A paid position of regular employment, involving a master and servant relationship and subject to termination by the master.

What does thinking of your business as an asset imply?

  1. Create a strategic plan which can be a tool to guide the business owner and the management team down the path to strong growth and solid profitability. The plan should have sales forecasts and budgets that are granular and defensible
  2. Plan carefully, early and often – ideally at the inception of the business, but at least two years before beginning the sale process, which takes six to twelve months on average. The exit plan will develop an operational infrastructure capable of sustaining growth while facilitating a smooth transition to another owner.
  3. Build a readily recognizable brand and ensure that your business is differentiated from other businesses within its sphere of operation.
  4. Build a strong culture and ensure that your employees are engaged in the corporate culture. The company should be separate and distinct from its founders in form and substance.
  5. Develop your company’s intellectual property portfolio (e.g Proprietary technology, websites, trademarks and patents).
  6. Ensure your financial and corporate information is periodically reviewed by a financial or legal professional, this ensures that you maintain independently verifiable information on your books.

Every entrepreneur should start and operate their business like it is an asset rather than a job. Assets can be bought and sold while jobs cannot. Consequently, the business owner should be thinking constantly about maximizing the value of their business, and positioning it and themselves for an exit: a successful sale to another person or entity that monetizes the years of risk and hard work, reflected in the current and future income streams generated by the business.

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