Every business has a brand and every brand has a value. Do you know how much your brand is worth as a business asset?
Probably not if you’re reading this post! So, we’ve put together six simple steps to help you work it out.
But, first of all, let’s remind you why brand is so important to the success of your company or organisation. These are some well-evidenced facts:
- Intangible assets such as brands equate to up to 80% of the purchase price when it comes to selling a business
- Large brands carry billions of dollars’ worth of value
- Even small businesses can have high brand value within their local marketplace or sector
- Total value of UK’s leading UK brands is £326.7 billion – even with an eight per cent dip since the global pandemic
These statistics are referenced at the end of this blog along with links you can follow if you want to read more.
Ok, so now we’ll show you the six steps:
Step 1: How much did you invest?
Work out the cost of everything you have spent to set up your brand. This includes logo creation, as well trademarks, domain names, signage and your brand materials. If you’ve brought orange furniture or branded mugs and mouse mats, everything can be counted.
Step 2: How much does it cost to achieve your current level of market awareness to attract new customers?
Assess how much your marketing and promotional activity has cost your business each year to date.
This can include things such advertising, digital promotions, publicity as well as posters, banners, leaflets and business cards. It can also include your membership costs for networking and events.
Step 3: How much does it cost to retain your current customer base?
Calculate the amount you have spent on advertising campaigns aimed at existing customers, loyalty programmes, giveaways, rewards and corporate gifts/entertaining.
You also need to include your costs to gather and analyse customer data and feedback. This can often be quite an outlay.
Step 4: How much can you charge for your goods and services?
This is otherwise known as price elasticity and basically means you have to work out how much people will pay compared to another brand. If demand stays high when you charge more, the value of you brand is high.
If you then push up the price, and demand stays high, then you’re really onto a winner. Obviously, this isn’t something you can cost out but it’s really important to factor in when we’re doing this exercise.
Step 5: How much are your income-based and future net earnings worth?
Now look at your current income, earning potential, cash flow and any cost-savings you have made. What might they be next year or in five years? Then consider the value of your business premises when you bought them and what they are worth now. How much would the rental be if you decided to let your space? Add any potential increases into the overall pot.
Step 6: How much is your brand worth compared to others?
Lastly, take a look at competitor brands in your market place that are similar to yours in size and offer. How much did they sell for, what’s the sale price or how much would you be prepared to pay? It’s just like selling your house and getting a market-based evaluation.
These six steps aren’t the only ways you can work out the value of your brand but we think they are definitely worth knowing. We hope you do too! Here are the links we used as part of our research. Check them out if you want to know more:
Here are the links we used as part of our research. Check them out if you want to know more:
Why not sign up for our monthly blog. Next time we’ll be talking about why your brand is your best business asset.
Also, let us know if you’re interested in joining one of our Brand Doctor workshops. You can find details here