Green Business Bureau Blog
Increase the Value of Your Business or Real Estate Holding by Going Green
Every business has a building property value, but a company is worth more than simply the ground it is built upon and the building it inhabits. There are also less tangible values associated with businesses that add to these values. This is often called business enterprise value, or BEV. Building a company that uses sustainable business practices and has a reputation for being an environmentally friendly company can enhance the BEV of your organization, leading to bigger returns if you decide to go public with stocks or sell the business.
What is Business Enterprise Value?
Business enterprise value (BEV) is, briefly, the value of a business not including the actual physical holdings or assets of that business; it is what your business is worth without its building, equipment or stock. The BEV of a business includes all of the intangible assets including leadership skill, marketing knowledge and reputation, the employees / workforce, working capital, intellectual property (copyrights, trademarks, patents and trade names), contracts and leases, and the like. Basically, the idea behind BEV is that a business is made of far more than buildings and physical stock.
Think about a famous company you know, such as Nike. Imagine the value of that Nike swoosh symbol! Or think of Crocs clog shoes; their value is in both the design and the special “croc lite” material that they use. These BEV components can be a large part of the sale price of a business.
How Can Green Initiatives Increase My Company’s BEV?
In today’s world, consumers are becoming more and more environmentally conscious every day. And to be honest, while many consumers are unwilling to make changes in their own daily behavior to make our planet healthier, they still expect such changes to be made by the companies that they work with or purchase goods from. In short, customers are increasingly not just wanting green efforts from companies like yours, they are demanding an effort to go green.
By building a green brand now you can create a buffet of products, trademarks, practices and reputation that will stay with your company for years. For example, say you own a soda bottling company and you design a new soda bottle that uses 20% less plastic. Now you have something to patent and something to advertise – you have created a green commodity that becomes part of your BEV. One example of how green can add BEV starts with Frito-Lay and their SunChips brand; they created a new compostable bag for their chips, a bag that can be put into the ground to decompose rather than taking up land fill space. While some issues developed with that bag, it became quite popular in many eco-friendly areas across cyberspace and the grocery store aisles.
Make the Move to Green
If you have spent any time on our GBB website, you probably know that going green offers a variety of benefits, but let’s recap. Going green is a healthy choice for our workers and our environment. By going green we contribute to healthier air, healthier water and general well being of our people and planet; we also help ensure that our resources will last for our children to use. Be eco-friendly can also mean instituting sustainable business practices that will result in finding a new customer base, better satisfying current customers, and even saving on expenditures and various business costs. In addition to all these great reasons to go green, building a company that is founded on sustainable business principles adds business enterprise value, making a company worth more money overall.