What are you worth?
Jul 17th, 2008 by admin
That could be a touchy question these days, but I’m not prying into your personal financial situation. I am asking about your value - how you are valued by others at home, at work and in your community. Are you appreciating or depreciating?
You can learn a lot about how people are valued by exploring how stock is valued. Why are two very similar stocks priced differently, one selling for 20 times earnings and the other at 2 times earnings? Ultimately it is the belief the buyer has about how the stock will perform in the future (the same could be true for you too).
There are tell-tale signs that buyers look for in a business to predict future performance. You’re probably familiar with most of them. They’re looking for size, growth, profits, cash flow, returns on invested capital, market share, and customer loyalty.
Beyond those obvious factors though, they are searching for two key predictors: 1) consistently strong and continually improving performance in those areas over long periods of time; and 2) the intangibles that produce that consistency.
So what are some of those value producing intangibles? They are things like the strength and competencies of the employees and the leadership team; reputation and brand strength; intellectual capital and innovation; systems and processes; and a healthy culture. There are more, but I think you get the point. Beyond consistent results, it’s the intangibles that seal the deal.
Those value producing intangibles didn’t just magically appear, right? It takes time, money, discipline, experimentation, never ending learning and continuous improvement to create the ability to consistently perform. This doesn’t just apply to business. The same holds true for us. If we want to increase our value in the world, we must continuously increase our capacity to reliably produce outstanding results.
Think about it. How do you value people you know or work with? I’ll bet it has something to do with the degree of trust and certainty you have in them. Can you absolutely depend on them? Will they do exactly what they have committed to do, now and in the future? Are they accountable and forthright? Are they consistently strong performers and getting even better? You’re judged the in same way whether you know it or not.
That’s why the most important investment you’ll ever make is in yourself. Yeah, I know the stories about people who’ve hit the investment jackpot and the other “Rich Dad” stories. But for most of us, the income we produce during our careers as employees or employers will likely far exceed all of our other investments. Ultimately it is your value (ability to contribute and make a difference) that will determine the ROI on your life’s work.
So what are you doing to increase your value producing intangibles – skills, knowledge, experience, attitude, relationships, beliefs, reputation and health? Don’t wait for somebody else to invest in you. If you’ve let a year go by without improvement, you are depreciating. Start investing your own time, money, and energy in your own capability portfolio. Wealth far in excess of your own investment will soon follow.
