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Value: John Warrillow

Intangibles that will woo buyers Add to ...

Now that my wife and I have two kids, our criteria for buying a house have changed. When we toured the last house we bought, the real estate agent spent as much time describing the intangibles as she did the features of the house itself.

She made sure to let us know that the local school is considered one of Toronto’s best; that the street is closed to cars on Halloween night for a party where all neighbours meet to hand out candy and mingle; that a young family two doors down had boys similar in age to ours; and that the closest Starbucks was stumbling distance away.

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If the house had burned down, I think we would still have bought the land and rebuilt in its footprint because of all of the side benefits we learned about.

Like a home, your business also has intangible assets that a potential buyer needs to be made aware of. It’s part of creating “curb appeal” for your organization, boosting the image it projects to those you might make you an offer.

It’s a process I’ve described over the last couple of days. The first two steps of a three-step plan I suggested were to formalize your human resource policies and assemble a binder of documents and processes you want your staff to use.

The final step is to document your intangibles.

One way to begin brainstorming the intangible assets you have to offer is to imagine the country being taken over by a wayward military regime, and being forced to flee without any money or things.

What intellectual capital have you acquired that would allow you to set up your business in another country and be successful again?

For example, McDonald’s famously has a secret checklist of criteria it uses to determine new franchise locations with the best chances of success.

The intangibles you want to document could include:

  • Criteria you use to evaluate a potential new location.
  • A formula for acquiring new customers.
  • Proprietary research you’ve conducted.
  • Criteria you use for evaluating potential employees.
  • Your unique approach for satisfying a customer.

As with selling a house, your company’s curb appeal goes a long way toward closing a deal. While hard assets are easy to see and value, your people and your approaches are the intangible things that give a buyer confidence to make an attractive offer to acquire your business.

Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He is the author of Built To Sell: Creating a Business That Can Thrive Without You, which will be released in April.

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