The Four Cs

What makes your business valuable? It is likely that 80% of your company's value lies within the four Intangible Capitals or 4Cs. These Intangible Capitals consist of Human, Social, Customer, and Structural Capital.

People are everything. The Human Capital in your business is one of the most difficu to navigate and one of the most important. Human Capital is the measure of talent on your team. According to Walking to Destiny, "62% of owners indicated that finding and retaining top talent is the biggest challenge they face." When working on your employee development plans, follow a series of steps that encourage growth in your employees and your business. All the Value Advisors we interviewed mentioned that some owners come to them stating that they want to exit their business because of operational issues that make them unhappy. However, after working with the Value Advisors on building value in their company, the owners ultimately decide to stay in the business either in their same role or in a more supervisory capacity until they are ready to harvest the value in their business during an exit.

This Social Capital, or company culture, embraces the people. How they communicate, what they believe in, and how they operate internally and externally are key components of a company's culture. Social Capital represents your brand, how your team works, the rhythm of the day-to-day operations, and the way you interact with customers. Developing strong Social Capital in your business can take years. Social Capital is one of the hardest capitals to transition to a new owner. Ask yourself when working on your exit plan, though your culture may fit your business, does it fit the business of the organization acquiring you?

Without customers, you have no business, for obvious reasons. As small to lower middle-market companies, we face the dreaded customer concentration factor.

One of the most effective ways to build value in your business is through strong Customer Capital. It is important to view your business from the eyes of your customer. This allows you to see where your business excels and your organization's areas for growth. What are three things a customer would say your business does well and what would they say you should stop doing as an organization? By seeing your business through your customer's eyes, you can address their pain points and meet their needs.