Walk down the streets of any British city centre and sooner or later you’ll find someone playing cover tunes by the likes of Elton John or Ed Sheeran. These buskers eke out a modest living while the stars they impersonate run thriving empires. Last year, Elton John raked in £65m for the last four months of his North American tour, while Ed Sheeran’s world tour grossed over £607m, making it the highest-grossing tour of all time.
What’s going on here? Are Elton John or Ed Sheeran that much more talented than the hundreds of artists playing their songs?
The difference comes down to who controls the product. In the case of Elton and Ed, they own the music and the personal brand they’ve created. The cover artist is just reselling their stuff. They’re not doing anything original. That’s why superstars have bulging bank accounts, and why buskers have half-empty paper cups.
The value of your brand.
The music business is a helpful analogy to explain why creating a unique brand is such a big contributor to the value of your company. Acquirers want what they could not easily copy. If you’re reselling other people’s products and services, an acquirer will argue that there are probably dozens of competitors driving down your margins on a regular basis. Furthermore, they may conclude that they too could earn a license to resell whatever it is you’re distributing and will, therefore, place little value in the company you’ve built.
However, if you’ve created something exclusive – a unique product or brand that makes people believe what you do is different – an acquirer will pay more, arguing that it is difficult to reproduce what you’ve developed.
If you find yourself reselling other people’s products or services, however, you can still drive up the value of your business by creating a brand around the way you do it. You could argue that Peloton is just selling a stationary bike. But it’s the company they’ve created around the bike –including the community of riders that subscribe to it – that makes it different, and why it has recently driven Peloton’s value north of $7 billion.
To drive up the value of your company, it’s best to own whatever it is you’re selling. If that’s not possible, create a unique brand that makes consumers feel as if you do. It’s not enough to say that it’s you or your team that makes you unique. A distinctive brand is of more value than any one person.
Many business owners, however, over-value the worth of their company. They simply haven’t created something unique, nor grown the value of their business to a level that will achieve the selling price they’re after. If you’d like to know the true value of your company, why not start by taking the Value Builder Scorecard. It focuses on the eight main drivers for creating value in your company, and it’s been hugely successful, helping grow the value of over 400,000 businesses worldwide.
To take the Scorecard click here.
Alternatively, you could always busk it.