Editorial for “Broker/Agent” Magazine by Jason Hartman (circa 2004)
For What Price Would You Sell Your Reputation?
There is a concept in business known as “good will” and it doesn’t refer to the warm feeling alluded to in “peace on earth, good will toward men.” It is actually an accounting concept that values good will in situations involving mergers and acquisitions and it is defined as the value of the intangible assets of a business. It relates to the company’s reputation. Can there be any doubt that McDonald’s Golden Arches or Walt Disney’s Mickey Mouse have significant value? Of course, determining the actual value of such assets is often tenuous. It is not uncommon for companies to pay high prices for good will only to discover, too late, that they overpaid and have to write off or write down the value of that often-ambiguous asset.
Many entrepreneurs who have devoted large portions of their professional lives and made a significant investment of time and money to building good will have no idea what it is really worth. Many do not appreciate the value of good will and squander it. Others over-value it and miss opportunities to cash out of their companies by expecting more than their companies are really worth.
Since good will is a future benefit arising from past and present expenditures, executives must have faith and confidence that the investment will eventually produce value. The time after such expenditures are made and the benefits are actually realized is a particularly fragile period – one little misstep can ruin the entire process – and that is particularly true in the area of branding. Since the ultimate value of a brand is largely a matter of perception, if something happens to change that perception, the value of the brand is affected proportionally.
Consider two recent examples involving major personal brands, home décor maven Martha Stewart and real estate mogul Donald Trump. Stewart built a billion dollar-plus corporate empire on the perceived value of her name. In fact, she humbly named her company Martha Stewart Living Omnimedia Inc. Her magazine, television show and product line prominently featured her name, her face and her style. In spite of a reputation as a hard-driving and somewhat ruthless individual, she also developed a devoted following, a fan club in fact. She became a billionaire after a successful IPO of her company’s stock, but she made a serious misstep when she sold a few shares of stock in a friend’s company, allegedly as a result of inside information, and unleashed a firestorm of negative publicity. The tabloids had a field day and in short order, Stewart’s reputation and brand went into a tailspin. Unfortunately, her actions also caused many innocent investors to lose money as the stock in her company declined precipitously, adding to the tarnish on her image. She could not have anticipated the extent of the damage to her brand, but the market proved to be quick and ruthless in adjusting to a new reality. It will be a long, hard uphill climb to rebuild her brand and reclaim the reputation that she has lost – if she can stay out of prison. It appears that Stewart “sold” her personal brand and reputation for the measly sum of about $50,000. Buying or earning her reputation back may well be impossible at any price.
Most would say that Donald Trump has an oversized ego (not necessarily a bad thing since it’s an important attribute of his brand). During the late ‘80’s his name became synonymous with real estate wheeling and dealing as he built a billion dollar-plus real estate empire, including a glitzy casino in Atlantic City. His presence was so large at the peak of his popularity that he became known simply as “The Donald” and he and his glamorous wife became poster people for the lifestyles of the rich and famous. When his Hollywood-style marriage imploded and he suffered setbacks in the real estate collapse of the early 90’s, his brand faded and even though his name still graced Trump Tower in Manhattan and he still owned his Atlantic City casino, he virtually disappeared from the news media. His personal brand had lost its edge and even though his real estate empire eventually got back on its feet and his personal wealth was once again in the stratosphere, he just wasn’t that interesting any more.
Then a fortuitous thing happened – Trump became the star of a popular TV “reality” show, The Apprentice. Consistent with his reputation, his scary invective “You’re fired!” is now synonymous with his new image and once again, The Donald is in the news. His new notoriety has reinvigorated the Trump brand and that will eventually translate into increased good will for his company.
It is obvious that good will has real value that can be greatly diminished or enhanced by the actions of the person that owns the brand reputation. It is a good lesson to be learned and remembered by all who aspire to fame and fortune while adding good will to their balance sheets. We must be ever vigilant in protecting our reputations from those who attempt to damage it.
Jason Hartman, CRS, GRI, CSP is the author of “Become The Brand of Choice – Make Your Name A Powerful Brand and Earn Millions” and President of Empowered Investor International. For more information visit www.PlatinumSells.com or www.BrandofChoice.com
