Creating Value With No Investment

There are all sorts of reasons that people start their own business. It is funny, though, because very few of these people create a business to make a lot of money. Some people just can’t work for others and they are lousy employees. Others have a social mission in mind and others just want to create something.

Then there is the reality of things. Business speaks a different language and that language is finance. The business needs to make money in order to survive, but what is the true value of a business? Especially if the business was setup by someone not interested in money? That person might be creating all sorts of value for her business without even knowing it while others are determined to create value for their business but can’t. There is a variety of ways to create value, but it should be understood that value is in the eye of the beholder.

The reputation of the seller is a huge way to create value. Say there is a local organic produce seller in a neighborhood that loves this type of product. That owner is beloved by the neighbors and the grocery store is an essential part of those people’s lives. The books might say that this business only generates X amount of revenue, but the owner creates more value. The owner can sell the business for quite a bit more because the grocery store and her reputation are essential to the community. Now, if a buyer bought the store and franchised it to a different location, then the separate location wouldn’t have the same value. Being a respected owner can drive the price of your business through the roof.

Intellectual property is another great way to drive up the value of a company. Say you start a school for a very rare skill. There is nationwide demand for that skill and you are one of only a few people who can teach that skill. That intellectual infrastructure is tied to the company. It is rare, unique and worth a lot of money even though it didn’t cost you anything to make it. You can drive up the value of your company with innovative intellectual property. Your proven systems or ideas can really jack up the price of your business and put you in the driver’s seat when it comes time to sell. There are intangible ways to increase the value of your business.