The Most Significant Asset in Your Services Business

It’s your relationships.

No, you can’t measure the value of your network. As a solo or small firm professional services provider, however, the quality and depth of your professional relationships are critical. Few service providers disagree with that.?

Your network is so vital to your business, though, that you should think of it as an asset on the balance sheet of your business.

No, your accountant cannot calculate and insert a value on the balance sheet. But as with other intangible assets such as your brand value or your data, the quality and depth of your professional network significantly influences the value of the business.

Your cash balance and the value of your relationships only differ in one respect:? the former is tangible, the latter is intangible. The are similar in that when the value of either rises, the equity in your business (assets minus liabilities) rises. When either falls, the equity in your business declines.

More Important Than Cash?

The value of your relationships is so vital that their importance might even exceed that of cash. I offer two extremes to ponder as you consider whether you agree.

If you were to wake up one morning with no cash in your business, you would still have your relationships to draw on as you rebuilt your cash balance. One real life example of this scenario is startups with bootstrap funding that comes from friends and family.?

Consider, on the other hand, if you were too wake up entirely alone, with the equity in your network, whether family, friends, or other professional relationships, at zero. It’s hard to see how, in this extreme hypothetical, your cash balance would last very long.

Growing and Depleting the Relationship Account

You cannot place a tangible value on your relationships. What you can develop a sense of, though, is whether the value of this critically vital asset is either rising or falling.

Just like your cash in the bank, the relationship account rises or falls based on deposits or withdrawals. A deposit is an action that deepens a relationship by fostering connection, trust, respect, and likeability. A withdrawal puts a dent in or even destroys connection, trust, respect, and likeability.

These deposits or withdrawals happen countless times a day. Sometimes we’re aware of them, and often they happen without us being conscious of them at the time. These deposits and withdrawals can be quite significant, but most are minor. Some of them are so insignificant to us that we don’t even remember them.

The vital point is that the value of your network to your business, just like your cash balance, is dynamic. It's moving up or down all the time. The only question is whether it's rising or falling.

In next week’s edition of The Price and Value Journey, I’ll cover deposits to and withdrawals from your relationship account in greater detail.

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Recent Podcast Episodes of The Price and Value Journey

We recently featured two outstanding guests on the podcast version of The Price and Value Journey:

Bernadette L. Harris joined me for a powerful conversation, sharing how the growth in her accounting practice led to a breaking point for her personally. She discussed how the pandemic amplified the already high pressure of tax return season, and how a health scare led to a pivotal decision to drastically cut down her client list. She discussed her transition to being the CEO of her own business, moving out of day-to-day operations, and her move to Mexico.

You can find this compelling interview on your favorite podcast app or by following this link: https://lnkd.in/giTSU5xF.

Hal Clifford , an accomplished ghostwriter with four decades of experience, joined me to discuss the ins and outs of hiring and working with a ghostwriter. If you want to realize your dream of becoming the author of your own non-fiction business book, but don't think you can handle the writing requirements, even with an author coach or editor, this interview is for you.

You can find this interview on your favorite podcast app or by following this link: https://lnkd.in/exWPifqg.

If you have a service provider you think would make a great guest for the show, please send me a message. We're always looking for professional service providers who want to tell the story of their own journey, or authorities in a topic of interest to solo and small firm professional service providers.

#relationships #network #networking #professionalservices #pricevaluejourney

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John Ray advises solopreneurs and small professional services firms on their two most frustrating problems: pricing and business development. John is passionate about how changes in mindset, positioning, and pricing change the trajectory of a business and the lifestyle choices of a business owner. His clients are professionals who are selling their expertise, such as consultants, coaches, attorneys, CPAs, accountants and bookkeepers, marketing professionals, and other professional services practitioners.

John is the author of the bestselling book, The Generosity Mindset: A Journey to Business Success by Raising Your Confidence, Value, and Prices. The book covers topics like value and adopting a mindset of value, pricing your services more effectively, proposals, and essential elements of growing your business. The book is available at all major physical and online book retailers.