There are various reasons why someone might like to buy or invest in a particular business. It might be hugely profitable. It might have an owner with a strong reputation for entrepreneurship, leading them to believe that the company is likely to achieve great things. In many cases, though, what sets one business apart from comparable businesses is its collection of assets.
Not all assets are similarly valuable, though, and anyone looking to find investment for their business — or offload it for a decent price — needs to be aware of this. It should guide their actions, pushing them to invest in things that will matter not only for day-to-day operations but also for long-term company value.
In this post, we’re going to look at five business assets that prospective investors and buyers alike will always be eager to find. Let’s get to them.
A desirable location
Even though more and more businesses are moving to online-only operation, there are still plenty of companies that need to operate out of dedicated premises: restaurants, for instance, or social destinations, or traditional retailers that don’t want to miss out on foot traffic. Those companies are hugely dependent upon their locations. Only destination eateries can attract enough buzz to make up for having unappealing locations — while a mediocre restaurant can still do good business if it happens to have a prime spot in a busy area.
Accordingly, a desirable location is very interesting to potential investors or buyers, because it means that there’s incredible potential. Even if a business in a great spot is doing fairly well, it could surely do better — and if it’s doing poorly, then a buyer or investor could get a fantastic deal that could pay off for them hugely down the line following a total overhaul.
A skilled workforce
This is more significant for investors than for buyers because it couldn’t be guaranteed that an existing workforce would stay on to work for a new owner. That said, the existing owner could reach an agreement with their employees to commit to staying — if necessary, they could give out financial incentives, knowing that keeping them around would raise the company’s value.
Related: Telling Employees That You're Selling Your Business
Investors want to know that the companies they’re investing in have more than just potential on their side, because businesses with potential fail all the time. In the end, an average business model with a great workforce will most likely do better than a great business model with an average workforce — which is why it’s important to know who’s running the show.
For a great example of the difference a team makes, we can use VA Claim Pros. It’s a service for helping veterans win the disability benefits they deserve, but it isn’t the only one, so what makes it special? Well, it’s owned by veterans, and it has a team with meaningful experience in all the relevant areas. If someone wanted to invest in a restaurant, they’d look for one owned by a seasoned restaurant owner, and it’s the same here: a veteran-owned business will care more.
And while buyers can bring in their own teams, that’s generally a significant problem from a practical standpoint. The hiring process is long and expensive, and leads to a training process that’s about as awkward to navigate. Simply retaining the existing employees (who already know everything that needs to be done) will almost-always be preferential.
A brand identity
It’s important for a business to be memorable and form positive impressions, because that grants it some cultural weight. When a prospective customer needs something, this brand association will make it considerably more likely that they’ll think of that business first. The more work a company does to build up a notable brand identity, the more valuable it will become.
Related: Selling a Business: Understand the Transfer of Intellectual Property
There are pros and cons to a given brand, of course. Think about Blockbuster Video, a brand that went out of business years back as a result of its colossal failure to adapt to the internet age (efforts were made, admittedly, but internal turmoil led to their collapse). That brand still has value because people recognize it, but it would also be tough for anyone to resurrect it because it’s closely associated with failure.
Savvy buyers know how to take advantage of existing branding work, whether it involves bolstering the breadth of an existing reputation or finding a way to spearhead a reinvention that draws on the name recognition but ultimately goes in a different direction.
Video: How To Build Brand Identity | by Rebrandly Branded Short Links
A full set of processes
If the existing workforce stays on after a purchase, it might not be immediately vital to dig deep into how everything works, but it will need to be done eventually — and when that happens, having no clear documentation will make it really difficult to figure out what’s going on. If the workforce leaves without writing processes down, the new owner could end up totally lost.
This is why anyone who wants to sell or grow their business should invest in documenting all their processes electronically. How do they find new leads? How do they deal with customers? How do they address HR issues? The more gets formally logged, the easier it would be for a buyer to get things up and running smoothly — and the more they’d pay for the company.
A range of partners
Most companies don’t operate completely solo, and something that allows a lot of smaller businesses to punch well above their weight is having established relationships with larger brands that aren’t their direct competitors. Networking is no less important for companies than it is for individual professionals — and once a business relationship is established, it can generally survive changes in ownership provided an effort is made to preserve it.
Someone looking to get into a particular industry, then, might be far more interested in an otherwise-unremarkable business if it happened to already be associated with some much more notable businesses. They could build on those associations while improving the business in general, leading to faster growth and easier marketing.
Each of these assets can be enough to significantly raise the perceived value of a business, leading to a serious uptick in interest from potential investors and/or buyers. If you’re planning to sell your business (or look for outside investment), make it a priority to build up your corporate assets. You won’t regret it.
More on the topic: What Makes a Business Easy to Sell
