LEARN HOW TO VALUE YOUR SMALL BUSINESS BRAND.
There haven’t been many articles on how to value a small business brand, because it is hard, and brand value is one of the most important assets any company can have! For instance, what do you think would happen if Red Bull sold its brand name and logo to Coca Cola but kept its manufacturing and distribution? What about if Ferrari sold its brand name and logo to Mazda but kept its manufacturing and dealership businesses?
Would either of these companies stay in business for long without their brands? Probably not, unless they used the money from the sales to build new brands. The point here is that the brand is the keystone to many, many different business models. It is the MOST valuable asset, and one that pays long term dividends.
So, do you want to know how to a small business brand? Here are our 3 steps for getting the number just right and learning how much you might be able to get for the brand that you’ve been building…
- What percentage of your new business comes purely from self-motivated customer referrals, and how much in sales does this amount to each year? Note: This is the amount of sales that you spend NOTHING to achieve each year in marketing or in advertising.
- Subtract your cost of goods or services sold from the referral sales number above, and you will have one measure of the profitability of your brand.
- What percentage of your business comes purely from self-motivated or minimally motivated returning customers?
- Subtract your cost of goods or services sold, and you will have another measure of the profitability of your brand.
- How large is your audience? Add it all up! Of all of the social media networks and list building mediums that you’ve been working on over the years, you have probably built up an impressive collection of people who are familiar with your brand, and it is easy to figure out the value of this audience, IF you have the data. Lists to include are…
Mobile Phone List:
Postal Address List:
- For each audience on your list above, add up the amount in sales that each list has generated for your business over the last year (in DIRECT sales to that list, as a result of outreach to that list, on that network or medium that the list is compiled within). This number is a great indicator what each of your lists could produce in future sales!
Ok, so how does this help you know how to value a small business brand? Simple. Now that you have your 3 number totals from referral sales, returning customers and list sales, add them up and you will have an estimation of the sales that your brand produces without much (if any) sales or marketing activity. This annual revenue is THE major piece of your brand’s value.
A purchaser of your brand might take this number and multiply it by a decimal, like .7, annually over the next 3 to 5 years to see just how much revenue your brand is capable of driving without any intervention. The .7 number simply assumes that the revenue will go down on its own over time.. Then the investor would give you a purchase offer based on this revenue. The revenue from these three things is purely attributable to the power of the brand that you have built, and it is what gives your brand value.
If you are unimpressed with your results, LET’S TALK! Brand value is the best retirement plan that an entrepreneur can hope for, and we can help you sail off into the golden years with ease!