True Value of Your Hispanic Business

by Latin Biz Today

Brand equity is among the most significant intangible assets in that it drives sales. Generally speaking, there are three ways to measure brand equity:

  • Place a financial value on a given brand

 

  • Express brand value as a means for brand extension

 

  • Access brand value from the perspective of consumers.

 

For our purposes, only the first and third definitions apply.

 

What is the core question?

The question is: how does a typical small-business owner go about determining the value of his or her brand? One simple method involves comparing the expected future revenue from the branded product against that from an equivalent non-branded product. At best, however, this approach will yield a crude approximation, one that fails to take into account considerations such as brand image and brand awareness.

Corporations routinely use intangible assets to reflect company value to shareholders, (and typically 25 percent of corporate profits are attributable to intangible assets). The question is: Why do small businesses often fail to quantify such a vital element of value?

According to Harvard Business Review case studies, while the average value of a small business exceeds $500,000, sale price variances of 5 percent to 20 percent (or $25,000 to $100,000) are not uncommon.

For these reasons it is essential that you seek out the services of a business valuation expert. You will need the three most recent tax filings for your business and year-to-date balance statements.