Is your knowledge, skills, or even experience an asset?
What about your brand, logo, or the list of customers you generated over time?
If you’ve ever asked yourself these questions, you’ll find your answers here.
In this article, we’ll delve deeper into the importance of this mysterious, exotic asset type that can’t be seen or touched, but can be infinitely valuable called – intangible assets.
- What is an intangible asset?
- Intangible vs tangible assets
- Why are intangible assets so important?
- The most important intangible asset
- How Data Factory can help you
What is an intangible asset?
An intangible asset is an asset with no physical presence and long term business value. These are assets you can’t see, touch, or feel.
Your data, brand recognition, logo, reputation, knowledge, know-how, patents, trademarks, copyrights, franchises, customer list, domain name, client relationships, lease agreements, licensing agreements, are all examples of intangible assets.
Intangible assets are difficult to assign value, but they can be extremely valuable. In fact, the largest part of today’s economy consists of intangible assets. They are especially important for small businesses because they improve long term value.
Intangible vs tangible assets
Tangible assets are the opposite of intangible assets. They have a physical presence (can be seen or touched) and their value can be determined fairly easily.
Here’s how intangible assets differ from tangible assets:
Why are intangible assets so important?
Financial value of tangible and intangible assets completely reversed in the last 30 years. Intangible assets have grown in relevance and importance, which is evident with many new startups. A startup doesn’t need much inventory, buildings or machinery to get started. Everything can be done from a laptop and a co-working space.
So, are intangible assets the future of growth and productivity for business? McKinsey set out to find the answer.
McKinsey’s research analyzed investment in intangible assets, which are playing an important role in driving corporate performance and economic growth in the digital economy. Study shows correlations between higher investment in intangible assets and higher levels of productivity and growth in the economy and business.
McKinsey used survey data of more than 860 executives to reveal that “top growers” – companies in the top quartile for growth in gross value added – invest 2.6 times more in intangible assets (such as training their employees, research, technology, software, human capital) than low growers. As a result, top growers grow 6.7 times more than low growers.
Bottom line is this: If you want your business to grow faster, pay more attention to your intangible assets.
The most important intangible asset
McKinsey’s report identified 4 intangibles that matter most, one of which is – data.
According to the report, fast-growing companies are:
- 1.3 times more likely to have their own data, and
- 1.8 times more likely to run analytics decisions in real time (dashboards) than slow-growing companies.
We strongly believe data is actually the most important intangible asset. In fact, our entire business is based around empowering business owners to use data to elevate their business.
Here’s a look at 5 ways data can help your business:
Data helps you make better decisions
Smart decision-making usually means making decisions that are likely to produce positive results and bring your business toward its goals. Traditionally, you had to rely on your experience and gut feeling to make smart decisions, which is not always the best way to make decisions. Even though your experience and gut feeling are invaluable, they can sometimes lead you in the wrong direction.
Data, on the other hand, is the single source of truth when it comes to decision making. As the old saying goes: “Numbers don’t lie”. It’s never been easier to collect, analyze, and interpret your business data into actionable insights. You now have the ability to use data to guide and back-up your decision-making.
Data helps you track metrics and understand their performance
Data helps you monitor key metrics and understand the performance of your marketing efforts, customer service, sales, shipping, and other parts of your business.
Example: Say you wanted to know the most optimal way to allocate your marketing budget for the next quarter. Diving into your past marketing data you’re able to see which of your marketing channels produced the best or worst results and allocate your marketing budget accordingly.
Data helps you understand your customers
How well do you know your customers? Do you know each of your customers by name, address or phone number? Do you know what their buying preferences or behaviors are?
Capturing all your customer data helps you know your customers. With customer data, you can identify trends and patterns, buying behavior and habits, segment customers by various categories, and so on, that will all help you serve your customers better and bring in more sales.
Data help you identify and solve problems
Data and the insights it provides are powerful tools you can use in your business to solve every-day business problems in real-time.
Sometimes there’s going to be problems with overspending on advertising, or managing inventory and shipping. Other times there’s going to be challenges with various fees, or managing costs. Sometimes all these problems will happen at the same time.
Data analytics can help you drill down into virtually every problem you might be experiencing in your business and identify the root cause. Once you have the knowledge of what’s causing the problem, often in real-time, you have the opportunity to change your actions accordingly and push your business forward.
Data helps you differentiate from your competitors
Most businesses are still not data-driven which is absolutely absurd given the amount of new data being created every day.
Being data-driven means you rely on data to guide you every step of the way. It means you understand the importance of collecting, analyzing, and deriving insights from data to address business problems, identify new opportunities, and drive growth.
Since most businesses are still not reliant on data, now is the perfect time to make your business data-driven and separate yourself from the competitions.
How Data Factory can help you
If you’re seeking ways of building a data-driven organization, Data Factory can help you on your journey. We’re a team of experienced data experts ready to help you harness the power of data. Whether you need help collecting data, analyzing it, or building an action engine on top of your data, we’re here to help.
Here’s a dashboard example we can build for you to help you stay on top of your most important metrics:
Contact us today to learn more.