No, I’m not talking about good will in literal meaning.
It’s related to business valuation – Good will is the intangible value of a business, such as reputation, image and all other positive aspects.
Often, good will determines the business price tag a lot more than you think.
asset + good will = business price tag
Consider this for an example:
Suppose company A and B each has $10 million is asset, with similar financials.
A could be priced (and bought for) 10 times B due to this good will factor – Company A might has better reputation in the community or more valuable brand than Company B.
Managing – a.k.a. increasing – good will takes a lot of work. Press releases, philantrophic activities, and other reputation building activities are needed to create buzz around your business, thus raising its profile in the community.
Why you want your good will to be, well, good.
For one obvious reason, you have to want it to be good – You get a lot more from the sales of your business.
You don’t want “my business is sold 20 times cash flow” – You want “my business is sold 1000 times cash flow” – this is achievable if, and only if, you manage your good will well.
How to manage your business good will
There are several ways that guarantee your business to improve its good will value:
- Give back to the local community your business belong to – sponsor a cause, offer internship programmes, develop the community, etc.
- Build a rep – be a local champion.
- Help other businesses, including your competitors – love thy enemies.
- Develop a brand strategy, build it and protect it with all your might – successful business without a strong brand is a bit pointless.
- Niche, niche, niche – do everything niche shouts increased business value.
Dont’ forget, the most in-demand industry means more good will value to your business. That’s why online businesses are known for having a big, if not humongous, good will value.
Good will builder