Worth.
More than ever it is a very subjective measure. Indeed, price, worth and value appear to be out of alignment at present.
Real estate auction transactions are indicative of irrational pricing. So too, low-kilometre used motor vehicles, which are attracting sums which exceed the list price of new models. A new take on the phrase “pre-loved”.
Supply chain issues are contributing to inflated prices for used mining equipment. Businesses are attracted to ready access and immediacy, stimulating a willingness to outlay significant premiums to satisfy, fulfil the needs and expectations of NOW clients. The return of irrational exuberance.
IRRATIONAL RATIONALISATION
It is not all upside for business owners, particularly in the small to medium-sized enterprise sector, where considerable amounts of wealth, retirement and superannuation plans are tied to the value of family businesses.
Indeed, some personal service, hospitality and “bricks ‘n’ mortar” based operations are “priceless”. That is, they have little, no or negative value.
Countless exit strategies and succession plans have been discarded, reluctantly and by necessity. Working and career-futures have been extended or suspended.
Goodwill, always subjective, is hard to visualise, let alone quantify. Business-multiples have floundered, in absolute and relative terms. To some it is largely a concept whose time has come and gone. Negotiations have been vexed. A meeting of minds is a difficult goal or benchmark. Consensus and concurrence seem to be esoteric, oblique concepts and principles.
A CHANGE OF GEARS
A touch and measure of reality is riveted home to doubting Thomases when they seek additional funding from major established banking and finance sources. Notwithstanding the absence, or declining worth of bricks ‘n’ mortar businesses, the underlying value of the real estate is a non-negotiable imperative for risk-averse and risk-tolerant financiers. Shades of the omnipotent presence of “building society” mentality among bankers. Physical assets still appear to be solid guarantees.
Financial leveraging and gearing have been subjected to review. “Recession” and “depression” may have been, or will be avoided in the immediate future because of creeping socialism, throughout the public and regulatory, corridors of power. The consequences will see a lowering of gears as we individually and collectively, encounter and seek to overcome and conquer substantial inclines, on the way to brighter, more profitable and satisfying futures (nirvana).
GENERATIONAL GENERATORS
Inter-generation transitions are becoming increasingly prevalent and attractive.
Transaction costs are, seemingly nominal. Exit strategies often facilitate an ongoing presence, albeit occasional and informal, of the leader (often the founder of the business).
Working hard, being innovative, prepared to take considered risks and focused on the immediate and pressing needs of existing, prospective and past clients is, figuratively, and literally, profitable and worthwhile.
The true worth of a business is inextricably tied to its purpose, and the commitment of team-members to that ideal.
Sadly, very few business owners, leaders, managers and contributing team-members comprehend the concept of purpose.
A lack of fulfilment and motivation inevitably follow.
Be assured, purpose is seldom, if ever tied to or qualified by revenue, volume, market share, assets or wealth. They are simply score-lines which rapidly come and go.
From a young age I’ve always considered myself a multi-millionaire. If offered, I would readily decline offers of a million dollars for either of my arms, and for each of our family dogs. Worth has no bounds. Value is often measured in modules of fun, fulfilment, choice, independence and yes, unconditional love.
STAY FOCUSED
The underlying message is to stay focused on the needs, wants and aspirations of existing and prospective clients. Fulfilling such is a fundamental driving force and purpose. Scores are simply distractions. Moreover, they are influenced, determined and quantified by achieving, sustaining and enhancing purpose.
Barry Urquhart
Managing Director
Marketing Focus
M: 041 983 5555
E: Urquhart@marketingfocus.net.au