Customer Capital

This is video 2 of 4 for the mini series about the 4 different intangible capitals that carry the weight of your business value. Click the link in the comments to start from the beginning.”

"In the heart of every thriving business lies a key asset: its customers. Customer capital is simply the measure of the strength and diversification of your relationships with your customers."

"It begins with understanding who your customers are and their unique needs. Do you provide a boutique experience or are you scale focused?"

Diversifying your customer base is crucial. Relying on a few big accounts is a MAJOR risk. Try to have the revenue from one customer less than 5% of your total revenue. That’s a good sign from a buyer’s perspective. "

You can start by assessing your customer base by understanding key customer types and gaps in your market."

View your business through your customer's eyes. What do they value most about your service? Hire someone to take surveys and start narrowing your product or service offering. A buyer is ultimately acquiring you for your differentiation that you provide and it allows them to diversify their customer base.

"Remember, a business too dependent on its owner risks losing customer capital. Are you making the sales and are you the reason customers stay with your company? If so, that’s a major red flag for a buyer and they WILL discount your valuation."

Consider multi-year contracts for stability and to build long-term customer relationships. Turn customer experiences from transactional to transformational. How are you indispensable for their success? If you were to go out of business would your customer be able to pick up where they left off with someone else? Or would it be difficult for them to find the same thing you are offering somewhere else?"

"Invest in your customer capital so you can stop worrying about whether you can walk away and start planning your next adventure.”