We all take great pride in our homes. As our most valuable asset, we ensure that our homes are kept in pristine condition—even if it means looking outside our existing ‘budget’. We justify this expense by telling ourselves that if we invest in our home, it will only add to its current market value. But let’s be real: we really renovate because we like to keep up with the latest trends and popular paint colors as displayed on HGTV. No judgement here, we’re all guilty of this to some degree (e.g. the door handle on our front door has seen better days—time for an upgrade!).
The logic is simple: renovate the kitchen, throw on a new coat of paint and maybe even tear down a wall to change the concept of the main living space. Improvements lead to stronger consensus appeal, which leads to more potential buyers, which leads to greater demand, which leads to the higher value of your home.
Here’s the problem: unless you plan on selling your home, market value is grossly irrelevant. Realtors may disagree, however, with a background in the financial world, I can tell you that home renovations are notorious for delivering credit crises and stressful days to those who “rent-ovate” (a bankers’ term for those who will never be able to pay off the costs of renovations!).
Your Business Isn’t Your Home
The fact is, as a business owner, your home is not your most valuable asset (at least not in the financial sense). Sure, on paper it looks like the biggest lump sum but, in reality, your most valuable asset (the one that provides the greatest return on your investment) is your business. Your business pays the personal bills. Your business is your livelihood. Your business is what decides whether or not you can afford to purchase that new oscillating shower head for the multi-stream shower resort you’ve installed in the master ensuite.
Your business isn’t your home. Unlike your home, your business is directly affected by the mass appeal of its guests.
Therefore, any amount of money and time invested into improving the overall health of your business will create a positive return—often in more ways (tangible and intangible) than initially expected.
"Business owners are too busy with day to day activity to gain a true ‘appreciation for depreciation’ of their business."
This is not a reference to the physical space in which service is provided. Perhaps tearing down that wall in your business model will allow people to have a better vantage point of your services. Perhaps laying a metaphorical new lawn on the front of your marketing strategy will add to the curb appeal of your company brand. Or, maybe, a simple coat of paint over your existing client experience will go a long way toward enticing new clients/patients. If you listen carefully to your clients/patients and you invest into the improvements for which they truly desire, the return (financial, satisfaction, loyalty and increased demand) is well worth the investment.
The “RedFlag Series” aims to inspire professional service providers to ‘up their game’ with respect to business performance. By providing practical ‘food for thought’ regarding common ‘red flags’ which often hinder business success, our hope is to help owners/management mitigate complacency, stay on their toes and excel as savvy business owners.