I was excited to interview Tim because his company developed Business Plan Pro, a well-known business plan software (I’ve used it in the past and found it to be quite helpful). Tim is down to earth and was kind enough to share some of what he knows about business plans. Here is a sample where he talks about the difficulty of placing a numerical value on “brand”:
“Entrepreneurs can be tempted to “push” the financials to show more value than can be supported. That’s especially true in service and technology businesses.
For example, Internet entrepreneurs have a hard time valuing Internet traffic in a business plan. During the days of the dotcom boom, traffic tended to be overvalued. Today at least the overvaluation is gone. But even today there’s still no good way to place a value on Internet traffic per se.
The same is true for a service company with a strong name and reputation. Capturing the value of “brand” is a challenge. One high profile example I can think of is LLBean’s accumulated relations with customers — its brand reputation. There is tremendous value in LLBean’s brand reputation. Yet, LLBean’s brand value is not something than can be captured adequately in the company financials.”
Read the whole thing.