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What are the strategic assets of a business and why are they so important?

A simple way of understanding that question is by asking another question: If I was to buy your business, what is it that I would really be buying that holds the real value in your business? What would I do my due diligence on? The answer to that question will disclose the strategic (or real) assets of your business.

Typically, answers to this question are:

• Brand/profile/reputation in the market.
• Client/customer base.
• People.
• Knowledge and know-how.
• Exclusive licenses, rights or agreements/contracts.
• Distribution channels.
• A particular IT infrastructure.
• Alliances/networks.
• ...and so on.

It is interesting to note that most of these strategic assets do not, generally, appear in the balance sheet of a business. And even if they do they are even more rarely shown at a meaningful value. We have all heard the expression that our most valuable asset is our people yet traditional methods of accounting do not recognise this fact.

There is much currently being written on tangible v intangible assets. However we feel these arguments are largely academic and miss the main issue. It matters not whether the assets are tangible or intangible, the only thing that really matters is knowing which assets drive the real value in your business and learning how to leverage (manage) them more effectively to unlock that value in line with your business (value) strategy.

It is not only important to recognise what your strategic assets are but also how to leverage them, for it is the strategic assets that generate the real value in a business. Understand them, develop/improve them and protect them as they are the essence of your business'success in the future.

• What are the most important strategic assets in your business?
• Are you leveraging them as effectively as you can?
• How are you improving the value of and developing these assets?
• How are you protecting your strategic assets?