Respecting and Valuing Your Business Assets

A successful business has many assets, from money in the bank to the people who produce goods and services to the customers who provide revenue. From an accountant’s point of view, assets go on the positive side of the balance sheet, while liabilities – your debts, tax obligations and payables, for instance – go on the negative side. But this basic equation may not reflect the actual value of your business or the assets that make it possible to keep growing your company.

It is fairly easy to determine the value of these financial and physical business assets. For instance, you could simply look at the balance in your checking account or determine the market value of your property if you were to sell it tomorrow.

Liquidity is another consideration that is particularly important for an owner. Some business assets, like savings and investments, are highly liquid and can be sold immediately if extra funds are needed. On the other hand, real estate assets are not liquid and it could take weeks, months or even years before they could be sold to raise money.

But those physical and financial assets are far from the only valuable aspects of your business. There are also many intangible assets that can be equally or more important to your company. These types of assets include:

While it’s difficult to pin a solid number on the value of these business assets, always be sure to include them when thinking about the current status of your company.

But there’s another aspect to consider when thinking about your business assets. Do you treat your assets with respect? For instance, do you deplete your savings and investment accounts at the first opportunity, or do you keep those balances as high as possible? What steps are you taking to monitor and protect your brand or enforce your licensing rights? Are you treating your customers well or taking them for granted?

Marcus’ foundation for business success – people, processes, and products – provides a great framework for learning just how much you respect your tangible and intangible business assets.

When considering an investment, Marcus looks closely at how companies treat inventory and equipment. For instance, he found that the owners of a Tampa truck assembly business had placed a high value on their spare parts and assemblies. But when he visited the facility, he found old rusty parts and a warehouse in complete disarray. He discovered that the company has never taken an actual inventory and the true value of items on hand was much less than the number shown on the books. It was clear the owners did not respect their physical business assets and their business was suffering because of it.

How you treat your employees, managers and partners may be the most important factor in determining whether your business succeeds or closes its doors. “Your job as the CEO of the business is to be the coach,” says Marcus. “Rather than running people under the bus, you’ve got to get them on the bus with you.”

Unfortunately, many business owners look at their people as liabilities, rather than assets. They complain about the high cost of salaries, ignore their personal requests and fail to provide the respect every person deserves. That was certainly the case when Marcus visited a Los Angeles pet grooming business. He quickly saw that the owner blamed everything that went wrong on his employees and would throw temper tantrums on a regular basis. It was no surprise to Marcus that the business was going to the dogs because the owner focused on the customers’ pets rather than grooming his hard-working employees for the future.

To be successful, you need to value, manage and respect your assets. A good accountant can help you keep track of the financial values – which is always important in tracking your profitability, preparing your tax returns, and determining the sales value of your business. Just be sure to treat those assets – particularly your people, processes and products with respect. As Marcus says, “The customer is not No. 1 to me. They’re No. 2, right behind the employee.”

This article is informational only and subject to errors or omissions. As with any legal or regulatory advice, please consult your legal counsel or tax advisor to make sure you are in compliance with all and any federal, state, city or county rules and regulations. More