core-asset-heart-of-business

Core Asset: What is it, Why you need it and How to build a more valuable one

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There are many reasons people start their own business. Working for themselves, leaving the corporate rat-race behind, creating a business that fits in around their family and a better work-life balance, fulfilling their own entrepreneurial desire or perhaps they’ve come up with a fantastic product or service that fills a need in the marketplace like no other.

It’s rare for people to start a business with the goal to sell it for a great return down the track, yet when many business owners are some years into their own entrepreneurial journey, this is exactly where their mindset starts to head.

They’ve worked hard, put in the hard yards and are ready to kick back and reap the rewards. So what do they do?

When we work with clients focused on this goal, we begin by focussing on defining and building the most valuable ‘Core Asset’ possible.

What is a Core Asset?

  • Something a business owns or controls that is at the very heart of how that business makes a financial return.
  • The Core Asset’s quality is determined by factors such as its distinctiveness, the company’s ability to prevent others from copying it, the level of excitement it generates in the company’s customers and the profit margins that it can produce for the company.

So why is the Core Asset important to a business owner?

It’s the basis for creating a business with massive enterprise value. A business you can sell for a great return when you’re ready to hang up the business-owner boots.

When we work with clients focusing on this business goal, the first thing we do is determine the current quality of the Core Asset.

Let’s look at some big brands and look at what their Core Asset is. As we do this, put yourself in the mindset of a potential buyer and think about what you would pay to get your hands on their Core Asset.

  1. Coca Cola

Globally recognised brand and secret formula

  1. Apple

Brand recognition, the code to build iPhones, iPads and the like, as well as a culture and system of innovation that continues to create blockbuster new products

  1. KFC

Brand recognition and that secret herbs and spices recipe!

These are very broad but you can get the feel for what a Core Asset is. To appreciate the value of a strong core asset, ask yourself “what would happen to the value of each of those companies if they lost any of those core assets?”  What would happen to the value of Coke if Pepsi could use the same brand on their products?  What would happen to the value of Apple if they were unable to come up with any other innovations into the future?  What would happen to the value of KFC if their recipe was available to all of their competitors to use?

The quality of the Core Asset is directly proportional with what you can sell your business for.

So, sit back and take a long lens view of your business. What is the Core Asset of your business? What do you perceive it to be? What do your customers perceive it to be? And what is it worth?

And if you would like it to be worth more, how do you improve it?

One of the key outcomes from the ActionCOACH 6 Steps to Building a Better Business Workshop is a more valuable Core Asset defined for your business through our proprietary strategy tools.

Focusing on your Core Asset is a way to get smart and strategic about your business so you’re building a company with massive enterprise value and a future of financial freedom.

 

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How to Price For Business Success

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Think about some of the quality brands that are out there. You know the ones. Those companies that are synonymous with quality and excellent value for money (without being cheap). Those businesses who have made such a strong service connection with their customers that price isn’t even an issue anymore.

You know who they are. Wouldn’t you love to have your company name front of mind like that?

Well, it is absolutely possible and do-able. And you’ll be surprised by how something as simple as pricing can start you off on the right foot.

Getting the pricing of your product or service right takes practice but when you get it right, the impact on your business is huge. Improved margins, happy customers and clients who don’t haggle or ask for discounts, less work for more money. How good does that sound?

Many start-up businesses fall into the trap of competing on price. In fact, many businesses who have been around for years also make the mistake of dropping prices when competitors come onto the market.

It’s a dangerous strategy. Not only does it decrease those all-important margins and put the cash flow of the business at risk, but it also runs the risk of damaging the way your brand is perceived by the customer.

You can overcome this by intentionally building the right proposition and executing on the right strategies to charge a premium price. If you deliver the goods (both literally and metaphorically) to your client and they see the value in your product or service, they will return, regardless of price.

Price simply doesn’t become a factor in the purchasing decision when you execute the right proposition well.

Let’s look at a graphic design company as an example. A small business that started with one person grew to ten employees working out of a small office in the eastern suburbs. As the company grew, the owner started to compete with other design businesses on price focusing on providing logos and banner design for small to medium sized businesses.

The logos were running out the door! But at a very cheap price. The graphic design company was providing a basic service. They were completely overlooking the opportunity to be perceived as a strategic partner by their clients. Instead they were a logo sausage factory!

A change in direction saw the owner focus on providing ‘brand packages’ to start-ups. This service incorporated multiple products and a key consulting role – logo design, website design, social media branding, signage and the design of printed and marketing materials.

By doing this and by including face to face consulting time with their clients, the graphic design company were perceived by their clients as DESIGN EXPERTS, not just the guy down the road who will create a logo for you for $50.

They created the right proposition for their clients. They created a solution for their clients and they executed it at a smart and strategic level, charging a premium price for the service.

The result? A team of designers working on products and services that provided a higher rate of return on margins AND a list of satisfied and returning clients that did not blink at the cost of the service.

The perceived value of what the company offered had increased.

Along with their profits.

If you want to know how you can sort out the pricing products and service piece in your business, check out the 6 Steps to Building a Better Business Workshop.

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From ‘Just Getting By’ to Growth and Surplus: How to set goals based on market potential

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When we work with business owners, one of our challenges is helping them to break through their own limiting beliefs. Interestingly, when we drill down to the why behind starting the business, often its big picture related. They wanted better work/life balance, financial freedom and the chance to create a successful business that can be sold at a fantastic price down the track after all their blood, sweat and tears.

Yet what happens is that along the way, the big picture is forgotten. The business owner becomes consumed with the day to day running of the business. So much so that their goals suddenly shift from blue sky to just making enough to cover living costs.

These limitations mean they don’t grow fast enough, they don’t generate sufficient surplus, they don’t build wealth and they are constantly feeling that cash is tight. They are on a merry-go-round that has the potential to end in closing down the business instead of creating the financial freedom they had wanted when it all began.

Is this you? And if it is, how do you avoid falling into this trap?

The key is goal-setting. The difference is big picture and going for the dream and the incredible outcome you’ve always wanted.

Here’s how to set goals based on market potential rather than just getting by:

  1. Get your sub-conscious working for you

Establishing specific goals can unleash the full potential of the sub-conscious mind which dominates our mental resources. Being clear on our goals, articulating them and more importantly actioning them programs the sub-conscious to look for opportunities to make it all happen. You’re ready for success when you articulate what success looks like.

  1. Blue sky goals

We often see business owners who are so scared of success they self-sabotage and set goals that are a little wishy-washy. Their pull their goals back by 50% to give them a better shot of reaching the goal. But when they do that, they miss out on the remaining 50% of market potential their goal could actually achieve. It’s like running half a marathon and congratulating yourself for doing HALF the course. It’s great that you got there but don’t you really want to get to the finish line? Using tools like the ActionCOACH Dream Builder can get you thinking big and maximise the true potential of yourself and your business.

  1. Explore the potential

Christopher Columbus. Captain Cook. Marco Polo. Famous explorers who crossed oceans and continents to discover new lands and new potential. Imagine if they had decided that they’d stay close to shore because it was ‘safer’. It’s the same with your business. Get out there and explore market potential for your products and services and you’ll find it will end up in setting bigger goals. If what you are doing is working now, that’s great. But are you truly maximising the growth potential of each product or each service?

Only 6% of businesses have a written goal….but those 6% constitute more than 90% of successful businesses. When a business operates with a strong foundation and culture of goal setting and achievement (don’t forget the achieving part is very important), there is structure, clarity and confidence amongst all stakeholders.

It comes down to where you see your business in the future. Everyone has an end point. A destination where they see their business. By limiting the potential of the business through confused and uninspired goal-setting, you’ll end up stuck in the traffic with everyone else.

When you get clear and embrace the big vision with planning, action and positivity, that’s when the true potential of the business will manifest into wealth and abundance.

Ask yourself.

Are you resting on your laurels or building a dream?

If you are ready to build big dreams then you might want to check out the 6 Steps to Building a Better Business Workshop.