Business Assets and Relationships

The current economic conditions are redefining the valuation of business assets.

Traditional hard assets convey tangible monetary value that is realized when they are bought and sold, ideally at higher values than when they were previously exchanged.

But what happens when the exchange of these assets is a never-ending downward spiral that approaches zero valuation?

Hard Assets in a Forever Recession

Seth Godin recently coined a new term to describe our current economic environment – a forever recession. It’s one that has a great deal of merit when you consider what we’ve recently experienced, and especially what is possible in the future.

In a forever recession, the trend is towards lower asset values and higher maintenance costs. Whether you own a car, home, or stocks, their value has most likely been declining, but the maintenance costs have nevertheless remained the same – or even risen.

Do you really own an asset when the carrying costs can effectively bring its value to zero?  

Godin goes on to describe the race to the bottom, a condition that is affecting many industries. If you cannot differentiate your company such that you value is readily apparent in the markets you serve, then you are indeed in a race to that zero valuation.

Of course, when you get there you are out of business.

Relationships are the True Business Assets

If you are working harder and harder to liberate value from your business, then it’s value as a revenue generating asset is declining.

When an asset ceases to provide value, yet you continue investing in it to derive that value, you do not own it.  It owns you.

The true assets in business are relationships, the ones that create opportunities, and otherwise invigorate you and your business. They give you confidence and make you happy – provided the maintenance costs are reasonable.

Start Building Soft Assets for New Opportunities

Most small businesses are built from the ground up, typically with a very small capital investment.

It’s your relationships that got you where we are today. As long as you continue to nurture them, they will be there to sustain your business in any economic environment.

If you are interested in another perspective on relationships as assets, gives Access is an Asset by Chris Brogan a read.

It seems there may be more than a few of us thinking about assets, and what is going to be essential for ensuring the relevancy of our businesses in the years ahead.

Hard assets can go to zero, and in a currency crisis, which is not unforeseeable, your liquid assets could do the same.

The relationships that you respect and nurture are the only true currency in a volatile business world. Value them as you wish, though the day will come when you recognize them to be priceless.

Leave a comment below or share this with your community on with any of the share buttons below – or on the little red bar at the bottom of this page.  

Until next time,  Jeff

Photo Credit: jannoon028
Print Friendly

JeffKorhan.com runs on the Genesis Framework

Genesis Theme Framework

Genesis enables you to quickly and easily build incredible websites with Wordpress. Whether you are a novice or an advanced developer, you’ll find Genesis to be flexible, secure, and complete with lots of custom options and deep SEO settings for accomplishing all your objectives. Start using Genesis now!

First-class support and automatic theme updates make Genesis the smart choice for your Wordpress website or blog.

Comments

  1. Couldn’t agree more, Jeff. The way business is done, the way marketing is done is all changing. These relationships are what will truly add value to your business. It’s what levels the playing field between the big guy and the little guy.

    • Jeff Korhan says:

      Matt – Later today I’ll be publishing a few more ideas to help you stay ahead of the little guy – especially the posers that claim expertise they don’t have.

      Of course, that confuses our customers.

Speak Your Mind

*