Many people think of assets for your business as something they can see and touch. But intangible assets are not physical, yet they add significant value to a company and are just as important, if not more important, as your tangible assets.
What are Some Intangible Assets for Your Business?
Fire or floods cannot destroy intangible assets. They do not appear on your company’s balance sheet. Yet, they add tremendous value to your business. Intangible assets include brand name, brand recognition and other marketing initiatives such as website domain name and trademarks, contracts, customer lists and customer goodwill. These are assets you spend a great deal of time developing over the years.
Contracts are Intangible Assets
Various kinds of contracts add significant value to your business, depending on their terms. A sales contract that provisions items for low bulk rates can keep overhead costs in check in the long term. An advertising contract can lock-in negotiated marketing rates that won’t expire for decades. Other contracts that add value include employment contracts, franchise contracts, lease agreements and licensing agreements.
Marketing is an Intangible Asset
Marketing is a valuable intangible asset. Assets such as brand name, domain name and trademarks grow in value over time. If your marketing is highly recognizable, such as Coca-Cola and other iconic brands, your company will have a significantly higher value.
Customer Lists are Intangible Assets
Customer lists take a long time to build and are proprietary to your business. Customer lists include names, contact information and other information about your customers. The lists help you segment targeted marketing and gain new business. They are an extremely valuable intangible asset for your business that is impossible or costly to replace.
Goodwill is One of the Most Valuable Intangible Assets
Goodwill is irreplaceable. Your company’s reputation and relationships grow over the years you are in business. A solid reputation results in a solid public image, lower marketing costs and potential customers who want to do business with you. For someone buying your business, this asset is super-important because they will already have an established business and customer base in place.
What are Some Tangible Assets for Your Business?
Tangible assets are anything physical that hold value. Tangible assets include fixed assets such as your office building, computer equipment, machinery and furniture. Tangible assets also include current assets such as cash, your inventory of goods and short-term investments.
Tangible assets are typically used in the daily operation of your business. Their values depreciate over time, but they do have a residual value that is considered. Tangible assets can be collateral for business loans. You can sell them for cash, if necessary, to increase your liquidity.
Monitoring both the tangible and intangible assets for your business on a regular basis gives you a clear picture at any given time of how much your company is worth to potential investors or buyers.
Leslie Bloom has worked in upper-level management positions in both publishing and the mental health field. In addition to years of business and management experience, she has more than 20 years of experience writing for a variety of online and print publications, including Metro Magazine. She holds degrees in both journalism and law.