The Importance of Valuation

In terms of asset creation and asset value there is two types of Assets : Tangible and Intangible.

The most common realized asset is the physical asset - where is the least realized is the intangible asset. If you are going to build a service based or business that provides services. You will need to value the labour hours and mostly intellectual value. These costs need to be taken into consideration. Some software entrepreneurs make the mistake of not recording the labour hours by simply buidling the software and worrying about it later. This is freestyle entrepreneurship.

Freestyle entrepreneurship is dangerous because in the end you would have built something without the capability of not knowing its value. A structured entrepreneur knows the importance of keeping records henceforth they can determine the true value of the asset. By simply recording the man hours and sweat equity put into valuing the asset - we can then determine the true value of the asset. Value estimation is not actually feasible because they was no true measure . However if you end up creating a bang or boom then value is estimation is then perceived by the elasticity of demand and supply . Supply and demand being how people actually value the application or the frequency of how much the application (software) is used .

In most instances you find that the intangible asset is actually making the client - the product. Since it has become widely used the consumer then becomes the product and then the client becomes other service providers that want to market to the consumer.

Similar to branding, a brand can gain value as time passes and as it becomes more recognizable to people. This is known as a synergistic asset, possessing both intangible and tangible value.

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