Michael D. Moberly January 9, 2012
According to the Small Business Administration, SME’s in the U.S. are:
- 20+ million in number
- deliver approximately 39% of the U.S. GDP
- and reportedly produce two and one half times as much innovation (intangible assets and IP) per employee compared to larger firms
This leaves little question that SME’s produce and possess intangible assets that deliver value, revenue, profitability, and serve as foundations (viable building blocks) for growth and sustainability. It’s now time to believe it, act on it, and reap the benefits!
Obviously, I am a strong proponent/advocate of intangible assets. With few exceptions, they are embedded in every company, regardless of size or industry sector and after all, it is an economic fact that today 80+% of most company’s value and sources of revenue lie in – evolve directly from intangible assets.
But, why is it that a significant number of SME management teams’ familiarity with – interest in intangibles is sporadic, if not dismissive in terms of understanding…
- what they are
- how they’re produced
- where they exist
- the different forms they take, and
- how they can be profitably utilized and exploited
Numerous studies, many referenced in this blog, consistently report that senior executives consider the management, utilization, and risks to their intangibles to be a significant priority. Unfortunately, those important messages do not appear to be sufficiently resonating with SME management teams and boards to prompt them to take action and literally engage their intangibles.
Perhaps, there lies, at least in part, the crux of the challenge regarding intangible assets and SME management teams and boards, i.e., there needs to be a well-articulated repertoire of business (plan) oriented messages directed specifically to SME management teams and boards, that…
- bring clarity
- emphasize universality, and
- describe efficient strategies to identify, unravel, utilize, exploit and otherwise manage intangible assets
…to enhance a company’s value, deliver new sources of revenue, and serve as foundations (or building blocks) for company growth, profitability, and sustainability.
Another aspect of the challenges SME’s experience with intangible assets is that for a significant number of SME management teams, their initial exposure to intangibles was literally thrust upon them, sometimes in near ‘crisis-mode’ by regulatory mandates, i.e., Sarbanes-Oxley, FASB, and/or ISO standards. Of course, compliance with either of these requires significant staff time, the development of new procedures, and most certainly, additional resources and costs. Too, in today’s highly competitive but still recovering business environment, many SME management teams and boards already have ‘full plates’ insofar as remaining ahead of the recession wrecking ball.
This leaves less time, inclination, or curiosity to explore the variety of benefits that can accrue from the exploitation of intangibles, e.g., to enhance a company’s value, revenue, competitive advantages, and profitability.
Other reasons that contribute to, what I believe are SME management team/board reticence to pursue intangibles beyond addressing regulatory minimums include…a significant percentage of management teams still have limited experience with intangibles and retain a tendency to rely on (their) intuition and past practice business acumen, versus seeking and applying objective tools to quantify and measure intangibles’ overall contributory value, and otherwise devise projective (return-on-investment) business plans to justify devoting resources to their utilization and exploitation.
Helping SME’s and start-ups identify ways they can advance their company’s and render it more profitable and sustainable through the effective use of the intangible assets, which in most instances they have already produced, possess, or have acquired, will lead to elevating (intangible) asset performance by unlocking and enhancing their contributory value.
I often believe, however, and respectfully so, the manner in which management teams and board members frame their questions about utilizing and exploiting intangibles…
- is related to various levels of misunderstanding and operational un-familiarity with either the existence or utilization of the intangible asset side of their business.
- may not be so much oriented to company specific management, stewardship, and oversight of intangibles as it is seeking a one-size-fits-all…snap-shot-in-time template which they can take for the proverbial test drive in their company
I engage, on a daily basis, the real world of SME’s, which many times include (the SME’s) founders, owners, management teams, and boards who, in the midst of this lingering economic downturn remain somewhat skeptical about ‘quick fixes’ or ‘silver bullets’ particularly when their credit lines have been marginalized or depleted, and even the best articulated and structured proposals for (intangible) asset-backed utilization and/or lending fall short.
Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community. Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of unsubstantiated commentary or information piggy-backed to other sources.
Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction. I always welcome your inquiry at 314-440-3593 or [email protected]