Assets are the total resources of your business. They fall into two classes: tangible and intangible assets.

Tangible assets can easily be assigned a value and normally have a depreciable life, while intangibles are difficult to value and have more to do with the knowledge inside your employees' heads and the goodwill of your customers.

Professional organizations and trade associations that report industry profiles focus on profit-and-loss statements. Little attention is given to the structure of a business' balance sheet, where the assets are identified.

There are no industry guidelines or profile for tangible assets. The allocation of resources should be unique to your products and the market niches that you serve.

If you manufacture standard products for immediate shipment to customers, investment in finished goods inventory is very important. On the other hand, should your business be based on made-to-order products that are customized to the buyer's specifications, most of your assets will be allocated to raw material inventories and versatile production equipment.

I believe there are guidelines to be followed for intangible assets. This profile can be applied to any business operating within the roll-label industry. Your primary intangible assets should be characterized as people, communications and customer base.

Regardless of the bricks, mortar and machines you own, it is your people who are responsible for the products and services going out the door. People design the business plan, provide the creative spirit, establish the quality level of your products, and build commitment to one another and to your business.

Everything starts at the top of the organization and flows down to the lowest-level employees. If your company is not strong at the top, it will be almost impossible to field a winning team. Teamwork and concern and consideration of fellow workers are essential in building a strong people asset.

Communication: Who, what, when, where, how and why are the questions we ask. This is Human Nature 101. This "desire to know" is a need of employees, suppliers and customers.

Keep your people informed by offering simple, open and honest communications on a frequent basis. Outline your goals and plans. Report on your progress and concerns. Make communications a two-way street. Ask questions and encourage feedback.

Relationships with suppliers and customers will become partnerships if there are free-flowing discussions in both directions.

Customer base: The objective here is to build a long-term relationship with the customers who provide at least 75 percent of your income. It goes without saying that strong customers pay their bills in a timely fashion.

Are you proud to say that you supply your customers, and is the customer proud to say that you are their supplier? Are your customers creative? Do their own businesses continue to grow?

If you have established a solid asset in your customer base, you do not have to worry about frequently finding new customers just to maintain the status quo.

A business that has built a strong profile of these intangible resources will not have to concern itself about the allocation of tangible assets. Its people will employ internal and external communications with customers and suppliers to guide them in deploying the company's resources effectively.

Skip Heintzelman

Consulting Technical Editor

704/366-5204