The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Building Value: The Seen & Unseen

On September 3rd, 2013, posted in: Uncategorized by

Today, the market value of a company is determined by the intangibles as much as tangible metrics. In the old days, a company was valued by the things you could touch. If you had operating plants, equipment and inventory, then you had something worth selling. And if you had a little cash in the cookie jar, it just added to the selling price.

A business leader would hire someone with a knack for accounting and they would do some serious ciphering and kick out a value. Fairly rudimentary and short sighted, but you knew what you had and what it was worth.

Fast forward to 2013, where a company’s value is based on substantially more than the amount of furniture, fixtures and equipment one has accumulated. In today’s rush to monetize everything, what you can’t see may be worth more than anything you can see and touch.

Customer (or in our case, member) loyalty has a huge price tag. As an example, the fact that people would stick with a product/service offering through good and bad, ups and downs, and that sales may not have been hurt through the recent recessionary period and the eventual static conditions of a broken recovery thereafter, would drive up the company valuation and, as a result, come with a huge price tag.

Supporting data on that customer base drives the sales price higher. To know all of the demographic, psychographic and any other pertinent details on the consumer of a company’s product is a gold mine. To be sitting in an executive suite somewhere having spreadsheet after spreadsheet splashed all over your computer screen that tells you that a particular product is produced and sold at a profit, and then to know who buys it and why is a literal treasure trove of information that gooses the sales price through the roof.

Throw into the mix a skilled workforce and you again add substantive value to a company’s overall assessment. The people piece of any company is worth a lot – poor staffing has the reverse effect. As an example, if you are in the service business like we are and you get great service ratings from the surveys that are circulated, like we have, then the staff is truly an asset to the company. As a result, one must place a value on their abilities, relationships, wisdom and knowledge they have regarding the marketplace being served.

Lastly, and arguably the most important measurement of a company’s worth is their brand. How does the market view you? What emotions do you foster in consumers? Are they more good than bad? As consumers stack up all of the relationships and encounters, do they arrive at something that’s significant and meaningful in their lives? Does the market love what you stand for? Are you socially responsible? Do you share your value with the community you serve? Do you protect their interests? Do you download a positive contribution by your existence? Are you consistent with your mission and purpose?

If these questions are all answered in a manner that screams positive, then the company is worth substantially more than buildings, equipment and inventory.

If you’re worth a lot, don’t do anything that squanders your value – build on it.

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