How do you value your business?
Whether you’re heading into an investment round, looking to exit, or are just plain curious, there are a number of factors you need to consider, and some of them are obvious metrics. How much is your turnover, and what is your profit margin? What assets does the business own? What is the LTV (Lifetime Value) of your customers, and what is the size of your customer base?
These elements are relatively easy to quantify but that often means that one important factor is consistently ignored. Your brand.
How can brand have a value?
There’s a reason that the value of a brand is often ignored by businesses themselves, and that’s because it is seemingly impossible to measure your brand value.
How can you put a price of your brand name, logo, and website? How do you even start going about understanding what impact your brand has on the overall price tag of your business?
Well, although it’s not an exact science, there are specific elements that will be considered when estimating the financial value of your brand:
- Confidence and trust: how trusted are you in the industry, and by your customers? Do you have positive reviews online, strong word of mouth recommendations, testimonials on your website?
- Return business: you should already know the LTV of your customers, but do they return to you? Do they refer to you? How are you tracking and measuring how your brand reputation brings your business?
- Reputation of your founder/C suite: is your founder or your C-suite/board well known in their field? Do they advise into others? Is their opinion sought? Do they appear in trade and business publications?
These are metrics you should be monitoring as part of your brand growth and marketing strategy, but when it comes to valuing your brand, take a good hard look at those metrics and insight. Do they fill you with joy? Are you proud of them?
That gut emotional response will quickly give you an indication of whether someone looking to estimate the value of your business will have the same reaction.
But why does brand value matter?
After all, putting a price tag on your brand itself may not be something you’ve ever considered before. The important thing to remember is that while it may not matter to you, it will matter to a huge number of people – and for important situations.
When looking at the range of businesses they have the option to invest in, investors of any level (whether angel, seed, or syndication) will want to understand your brand value. This tells them a lot about the culture of your business, the hiring strategy, your position in the market, and your goals and ambitions for growth.
Here are some statistics to show just how important your customers’ opinions are: 73% of consumers love a brand because of helpful customer service. Presenting a brand consistently across all platforms can increase revenue by up to 23%, and 89% of shoppers stay loyal to brands that share their values. You need to be turning that purchasing power to your advantage, and that means growing strong relationships with your customers to increase your value to them.
From pitching for new business, applying for awards, and trying to nab the perfect candidate for that job opening you have, your brand reputation will matter. People will perform the ‘Google check’ and a huge amount of your online presence will tell them whether yours is a brand they want to work with, give an award, or work for.
Crisis comms matters
Do you remember the battery scandal of 2015? No?
There were two, one on a national scale and one on the international stage, but less than five years later, most people have absolutely no memory of either happening. (The two battery scandals of 2015 were EE and Samsung, by the way).
Your brand’s strong reputation and value will help you navigate any negative events of press coverage, because the strongest brands and the most valuable brands are more impactful than the bad news.
Okay, you’ve convinced me. How do I start?
You can start really simply by identifying three personality aspects of your brand:
- Your mission: what is it that you want to achieve? What difference do you want to make to the world, to your industry, to your customers?
- Your vision: how does the world look in five years time – ten years time?
- Values: what is important to your company. Honesty? Fun? Transparency? Sustainability?
Once you have these three elements nailed, you’ve taken the first and vital step to establishing your brand – which will pay off financially, one way or another.
Disagree with me? Email Emily now!