Building Your Brand as Part of Your Exit Strategy
Clear Advice Business is a business advisory firm created exclusively to help owners of small and mid-sized businesses navigate the journey to a successful exit. We focus on a three-step process we call the Bridge to Monetization™.
The first step — build value — should happen over time as you grow your business but should take high priority one to three years before your business exit to enhance the value.
Why? Because building value can get you a better price when it’s time to sell.
Building value in your brand pays dividends. As a business owner, not only will it help you secure a better sales price, but it will also generate bigger profits while you own the business.
Take Apple, for example. Over time, it’s built a reputation on quality, functionality, and making complexity simple. It’s why people pay more for Apple products than competitors and line up around the block to buy the latest products. That’s brand equity. It also leads to higher customer retention, reducing the cost of customer acquisition, and repeat sales. Most of Apple’s customers don’t own just one Apple product.
A recent study showed how important a strong brand can be to business value. Over the past four decades, the majority of the value of S&P 500 companies is attributable to intangible assets. In 1975, buyers assigned only 17% of a company’s value on intangible assets. Today, 83% of the business value of S&P 500 companies comes from intangible assets, including intellectual property, goodwill, and brand value. Whether you’re selling your business, succession planning, or both, you need to maximize your brand value to set the stage for success.
Think about it the way a prospective buyer might. What do they want to see in a company they are acquiring? They’ll place higher values on sustainable growth, a pathway to expand market penetration, and a strong brand. Reinforcing and strengthening the brand is essential in a business exit strategy. It builds trust and confidence among your clients and stakeholders. That trust and confidence, if messaged properly, will be observed and felt by prospective buyers, especially if they are strategic buyers within your industry.
The Power of the Brand
Want to experience the power of the brand? Take a look at this list. What’s the first name that comes to mind?
Chances are pretty good you thought of McDonald’s, Google, Facebook, Coca Cola, Amazon, Kleenex and Nike. If something else popped into your brain, it was likely one of their top competitors. Either way, these brands have strong brand equity that makes them more valuable than just the products they sell. With these top brands so strongly ingrained in our minds, it may seem like these companies have it made. Yet, they’re among the top advertisers in the world every year. They know that it takes effort to maintain and build brand value.
How Do You Build Your Brand?
To build value in your business, you need to build the brand.
Building your brand ranges from your logo, the look and feel of your website, and the way you market and communicate about your company. Your brand is the collective impact that hundreds of things create when taken together, including:
Positioning versus competitors
Perceived value vs. price
In short, it’s the sum of everything that people think, believe, know, feel, and experience about your company, its products, and services. The way your company is perceived by others will have a direct impact on the way others value your company. Building value takes a strategic plan and a commitment from a business owner to make it happen. Here’s the good news. Even if you haven’t focused on building your brand in the past, it’s not too late. If you’re considering an exit strategy within the next few years, there’s still time to build your brand and build your value.
To maximize the value of your brand, seek advice from Certified Exit Planner Eric Donner, ChFC®, CExP™, CAP®, CLU® at Clear Advice Business. Clear Advice Business can help you build value, protect value, and maximize your value when it’s time for your business exit.