How To Value Your Business Brand?
November 09, 2012 at 11:57 AM
This question from a business owner at Sunbelt’s How to Sell Your Business at the Right Time for the Right Price lunch seminar November 7: “How do you place a value on my brand?”
Great question and one we are very happy to hear because it tells us that this business owner knows his brand, and is working on building its value.
The short answer is – brand is all of your value. Without it, no one buys what you are selling. In other words – whether you’re working on your brand or not, there’s a perception of your brand in the marketplace. And that perception dictates how much you can sell and at what price.
The long answer, when we actually put pen to paper, is found in the Gross Margin line of your P&L. Your brand value can be measured by analyzing the amount by which your gross margin beats your non-branded competition, a practice known as Benchmarking.
How Branding Makes a Difference:
Take two companies producing the same goods with identical cost structures. One company’s branding efforts are minimal – product, service, customer relationship management are all “generic” and without strong brand support. The other company devotes considerable attention to brand – building a unique identity for their product, people and messaging in all facets of business.
Which company do you think commands the better price for its goods? Obviously, the well branded company. Since both have the same cost of goods, the difference shows up in higher Gross Margin. It’s measurable and you can check on it every day.
That’s a value driver. We can help with benchmarking to measure the value of your branding investment and efforts. A better understanding of value is a key management tool that will get you to that right price when you do sell your business.