Building our digital assets
Pixels are the new real estate
Passive income sounds great but, in practice, is a myth. A business which can survive without ongoing input from its founders is rare. It is doable, however, and the odds of success greatly increase by building digital assets.
I draw upon the ideas shared in 24 Assets book by Daniel Priestley.
What is a digital asset?
Soft digital assets drive income today as much as traditional assets like property, factories and machinery did in the industrial age. - Daniel Priestley
An estate agent could sell a flat in Kensington for £4m and yet the same property in Manchester would struggle to fetch £1m. The agent’s income relates to the value of the asset, rather than skill of their sales people. If a business owns a factory making shoes then it can earn money selling them. We intuitively understand that income relates to the utility and quality of the underlying physical asset. For many, it is difficult to see the value of soft and digital assets, e.g. a brand, website, video or blog. Such assets can be hugely valuable to a modern business. A digital asset is anything which retains its value without our involvement.
Types of digital assets
Business assets can be grouped into the following categories:
Intellectual Property: We own or are known for valuable ideas, methods or intellectual property. Trademarking of names and marks is one aspect of this.
Brand: We stand for something that is of value and have established trust with a loyal group of users and ambassadors. We can sell our products effectively through key channels to market. Crafting Our Business Plan explores this further.
Products: We have unique products that are difficult to replicate. How to Target a Niche Market suggests an approach. Products can fulfil different business development purposes, including: gifts, limited scope products and core products.
Systems: Processes that simplify and automate marketing, sales and operations. Our Startup in 7 Steps includes automation.
Culture: Attract, retain and develop talented people.
Funding: Can raise money on good terms. The business plan and financial structure are key.
Asset building steps
Business asset development steps can be defined as:
Create value by addressing an unaddressed problem in a financially sustainable way.
Progressively develop thought leadership via pitching, publishing, products, profile and partnerships.
Establish product/market fit where demand is growing exponentially and we are turning away good opportunities, due to capacity limits. Transform resource intensive activities into quality digital assets.
Scale business by further developing and exploiting digital assets. This may involve others franchising, reselling our products, partnering or investing.
Asset commercialisation. Assets across all categories work well together. We now have a business which is an asset in its own right, independent of our involvement. We can reap the financial rewards via ongoing profits or selling the business.
The 12 Principles for Becoming Oversubscribed in Business talk by Daniel Priestley
Crafting Our Business Plan post by Phil Martin
Making a Minimum Viable Product post by Phil Martin
Developing soft digital assets makes hard business sense. Until next Sunday, you may wish to brush up your video creation skills.