Business History Books » Business Consultant » Getting my Brand onto the Balance Sheet?
Getting my Brand onto the Balance Sheet?
Question:
120% of the annual value after the customers following the person leave. Hmm. I would think that’s good mike. I think there is not a standard for getting the brand (goodwill) onto the formal balance sheet before a sale, but rather that the business sale verifies the goodwill. (sorry). So one has to be inventive. If it is for accounting and not sales purposes you may be beating a dead horse on this one. ~zion~
Response:
Again, thanks for the info. I think I’m really getting somewhere with all of this now. However, the ideas that have been put forward all appear to be a little theoretical – whereas I could do with some more practical advice. Basically, to simplify the situation, my company has an annual turnover of a little over 130m. What I want to know is if the company were to change its name/brand and have no association at all with the old identity how much business/turnover would this cost. ie all things being the same (levels of business activity, etc.) how much turnover could realisticlly be expected the following year under a different brand name? Obviously we don’t want to do this in reality. But as far as the balance sheet goes I need to understand how I can go about getting this value as an auditable figure onto the brand sheet. Is there a company out there that is able to evaluate our brand value – and provide a bottom line figure that can be added to the balance sheet? Thanks again for all your advice and help. Matt
– Hide quoted text — Show quoted text -> Thanks for that info. It’s really helpful in pointing me in the right > direction. However, I probably should have been more specific – in > that my company is a service company. Specifically, we’re a > recruitment agency – and considered as one of the market leaders in > our sector. What I would like to do is evaluate the impact of our > brand on bringing business into the company. How much over and above > the work of our personnel is our brand contributing to the business? > A friend of mine, "Becky," owns a staffing agency and she has 5,000 > employees (including those who she puts to work for her various customers). > A lot of the business is built on the relationships she’s developed over the > years. Yes, she has excellent systems in place to run the business. I worked > together with her to implement those systems. > What would happen to the business if Becky left? I bet a lot of business > would go out the door with her. I think the business that is left behind is > the value of what you are calling "brand". I would call that remaining > business "good will". (My friend is actually in pretty good shape because > she has long term contracts with many of her bigger customers.) > After having read your post, the first idea I had was that you could run two > ads that are roughly equivalent in their ability to bring in new business, > and then measure the difference in response between the two ads. There’s a > little more to this than meets the eye because if you want to gather and > properly evaluate valid results, there’s a bit of science involved. > Actually, this is a pretty good way to measure "brand". The problem, though, > is that you want to measure "good will" and that is a totally different > matter. > This is also the dilemma of independent consultant’s. A consultant builds > the value of their business by building relationships with their clientele. > Because of this, all of the value is in the relationships and the business, > in and of itself, is of little or no value. > Recently, I was listening to a book-on-tape. The reader stated that the > value of a service oriented "business" such as an accountancy is, at best, > about 120% of the yearly value of the customers who remain after the > business is sold. I think this is the number for which you are looking. > Mike
Response:
Chat with the folk over at the Angus Reid Group. See what turns up. ~zion~
Response:
> Thanks for that info. It’s really helpful in pointing me in the right > direction. However, I probably should have been more specific – in > that my company is a service company. Specifically, we’re a > recruitment agency – and considered as one of the market leaders in > our sector. What I would like to do is evaluate the impact of our > brand on bringing business into the company. How much over and above > the work of our personnel is our brand contributing to the business?
A friend of mine, "Becky," owns a staffing agency and she has 5,000 employees (including those who she puts to work for her various customers). A lot of the business is built on the relationships she’s developed over the years. Yes, she has excellent systems in place to run the business. I worked together with her to implement those systems. What would happen to the business if Becky left? I bet a lot of business would go out the door with her. I think the business that is left behind is the value of what you are calling "brand". I would call that remaining business "good will". (My friend is actually in pretty good shape because she has long term contracts with many of her bigger customers.) After having read your post, the first idea I had was that you could run two ads that are roughly equivalent in their ability to bring in new business, and then measure the difference in response between the two ads. There’s a little more to this than meets the eye because if you want to gather and properly evaluate valid results, there’s a bit of science involved. Actually, this is a pretty good way to measure "brand". The problem, though, is that you want to measure "good will" and that is a totally different matter. This is also the dilemma of independent consultant’s. A consultant builds the value of their business by building relationships with their clientele. Because of this, all of the value is in the relationships and the business, in and of itself, is of little or no value. Recently, I was listening to a book-on-tape. The reader stated that the value of a service oriented "business" such as an accountancy is, at best, about 120% of the yearly value of the customers who remain after the business is sold. I think this is the number for which you are looking. Mike
Response:
Thanks for that info. It’s really helpful in pointing me in the right direction. However, I probably should have been more specific – in that my company is a service company. Specifically, we’re a recruitment agency – and considered as one of the market leaders in our sector. What I would like to do is evaluate the impact of our brand on bringing business into the company. How much over and above the work of our personnel is our brand contributing to the business? I have heard of Interbrand valuing the impact of brands – but their portfolio seems to be restricted to very large companies. Is this a task that a market research company could undertake? Are there other companies apart from Interbrand that would undertake this task? Is it a legally recognised asset when it appears on the balance sheet following this valuation process? Thanks again for any help.
– Hide quoted text — Show quoted text -> It’s a question of research and accounting, so you will want to consult > a CPA and a marketing research firm… well worth it if your brand is > hot. > Conduct a focus group of buyers and have them select between unlabeled > products. Pull the sample from random target market members, allowing > the appropriate error margin (use a research company). Then use this as > a control group to study more groups who are exposed to the branding of > the same products, and again see what they would buy. The more that went > with your product,(% of diffence compared to the percentage who selected > your product unlabeled) the better your branding is pulling, and the > video tapes prove it. > Compare these figures with local industry norms and see if you are > spending more or less to get and keep a customer. This will tell you how > your brand is pulling its weight in the marketplace. > If you are spending less for a sale, total the amounts (below the > average) you are saving. multiply it by industry growth averages and > project it out over a period of time to see the brands value for that > time. > Survey your customers at point of purchase to see how they learned about > you and monitor the time it takes for the customer to complete the > "decision" phase of the purchase. Shorter decision time = better brand > penetration among similarly priced products. > Check this again by developing some averages for your costs of (sales + > customer maintanance) per customer divided into your customer value over > the same period time frame, say three years. Include a reasonable > percentage of the location cost if that is a marketing factor. > Have your business audited for sale and see if you can get a brand > (goodwill) value in writing. > After all this, Along the curve of the brands expected value growth, > divide the projected value by the number of years used, then divied it > further into months and write it on the balance sheet > ~zion~
Response:
I often see large conglomerates and multi-national companies stating their net worth and publishing their balance sheets – only to see that there is a siginificant proportion attributed to their Brand Value. One only has to look at the takeover of Rowntree by Nestle – in which the physical value of Rowntree was something like 120m – yet Nestle paid over 1.2bn. The difference was all down to the value of the brand. What I would like to know is whether us ‘lesser mortals’ who work at smaller companies can have a similar effect on our bottom line figures. How can I go about auditing the equity in my company’s brand name? Is there an external, independent company that does this? How much does it cost? How long does it take? Does it have to be done every year? Any help or advice anyone can offer would be greatly appreciated. Thanks, Matt
Response:
It’s a question of research and accounting, so you will want to consult a CPA and a marketing research firm… well worth it if your brand is hot. Conduct a focus group of buyers and have them select between unlabeled products. Pull the sample from random target market members, allowing the appropriate error margin (use a research company). Then use this as a control group to study more groups who are exposed to the branding of the same products, and again see what they would buy. The more that went with your product,(% of diffence compared to the percentage who selected your product unlabeled) the better your branding is pulling, and the video tapes prove it. Compare these figures with local industry norms and see if you are spending more or less to get and keep a customer. This will tell you how your brand is pulling its weight in the marketplace. If you are spending less for a sale, total the amounts (below the average) you are saving. multiply it by industry growth averages and project it out over a period of time to see the brands value for that time. Survey your customers at point of purchase to see how they learned about you and monitor the time it takes for the customer to complete the "decision" phase of the purchase. Shorter decision time = better brand penetration among similarly priced products. Check this again by developing some averages for your costs of (sales + customer maintanance) per customer divided into your customer value over the same period time frame, say three years. Include a reasonable percentage of the location cost if that is a marketing factor. Have your business audited for sale and see if you can get a brand (goodwill) value in writing. After all this, Along the curve of the brands expected value growth, divide the projected value by the number of years used, then divied it further into months and write it on the balance sheet ~zion~