What Is Your Business Worth? Somerset Accountant Asks
January 26, 2012
“Never underestimate the power of passion.” – Eve Sawyer
I’ve heard from many of my contacts over these last few months, thanking me for the notes, sending thoughts and questions–and letting me know that they’ve sent their friends to see us for their business and family tax needs.THANK YOU!
As you probably have gathered, I write you these weekly notes because I sincerely desire to offer my experience and expertise in running the *business* aspect of my firm to my friends and contacts. And, of course, if your business grows in profitability, we’re actually incentivized to help you! I read every response, and I’m so grateful to be connected to a group of friends and business associates who are so committed to one another, and so responsive.
Keep ’em coming… And, of course, I’m always grateful for your referrals–they’re the lifeblood of our business. While many accountants and tax pros spend an arm and a leg for expensive advertisements, we’ve found that our BEST advertising is the relationships we maintain with our clients and friends.
No, I’m obviously not averse to advertising our services–it’s simply that those who have been referred by our clients and friends like you turn out to be our best kind of clients. So, thanks for your continued referrals! Read on–and send feedback (and don’t forget to let us know how we can help you!)…
Mark Clark’s “Real World” Business Strategy Going Beyond a Typical Business Valuation
Many accountants provide “business valuation” services. It’s extremely useful, for a variety of reasons — but clients often start from the wrong place.
Here’s what I suggest — as you look at the real value of your work, consider not only your immediate (short term) P/L but also your long term hopes; and in that process (this is the clincher) very carefully consider the value of the customer or the 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 contact 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 here in 2012, I urge you to carefully consider the value of the customer FIRST. I’m personally dedicated to your success. Can other accountants say that?