From JOMO (Joy Of Missing Out) to FOMO (Fear of Missing Out)

By Elton Noronha

Valuation, in it’s true sense, is the value that one sees in a brand or the kind of value that the brand creates for itself in the eyes of its customer, its supply partners and the company itself, i.e. employees, investors, shareholders etc.

Sharing how value creation forms the basis of any business growth, Rahul Singh, Founder & CEO, The Beer Café comments, “Value creation, in its wholesomeness, involves the brand in its entirety – the people that work for you, the people you work for, and other tangible and intangible aspects that add to the business being. According to me, investors play a huge role in the process of value creation. They’re the ones that add their faith into your vision for the brand. So if anyone were to ask me about the important aspects of building a brand, I’d say choose your investor wisely. Remember – It’s a Love-Hate relationship with your investors and shareholders when you’re working on creating a brand. You’ve got to respect their wishes and deliver true on their expectations, but you’ve also go to work towards the higher goal of creating the kind of brand that was originally intended (if not bigger and better!). So, yes, I guess value creation would also mean that the return on capital should supersede cost of capital.”

Manish Mandhana, Promoter, Mandhana Retail Ventures Ltd adds his thoughts to this as he shares, “According to me, valuation of a brand is based on the kind of product it delivers, and then of course, pure financials. To start off, robustness of business is primary – As an entrepreneur, you’ve got to work on business model that gives good cash flow. Your business should be able to generate cash by itself, and it is this sustainability which will fuel continual value creation. Secondly, having prolific board of directors and confident investors builds businesses and makes it valuable. These form your support system, and when your support system is strong, you’re able to withstand all challenges and keep moving forward without compromising on your brand value. Third, maintain transparency in your business — this makes life a whole lot easier and allows you to focus on building a business holistically. Lastly, pay heed to market forces that shape business trends — it’s best to be aware than to be blind-sighted and left staggered.”

Endorsing the role of the customer and the market at large in the process of valuating a brand, Bibek Agarwal CFO, Raymond asserts, “You’ve got to have a strong product – whether it’s an investor or a consumer – nobody is going to take a chance with a product that’s weak. Once you have that in place, the next step is keeping a check on what keeps your consumer associated with you, and responding to the market quickly in delivering what the consumer is looking for. Maintaining high consumer focus in your product delivery, and assertive use of immersive technology to influence the consumer in the right manner is the best way to grow your brand value (once you’re a brand that’s already out in the market!). It is only when consumers trust your brand and keep coming back to you that you can truly valuate your brand with some real meaning!”

On the other hand, Hemant Patel, CEO, Alder Capital emphasizes the investors’ point of view on the subject of value creation, as he comments, “From an investor’s point of view, I believe the opportunities landscapes that a business presents is what defines the nature of investment and also subsequently the process of building value of the business. First up, the business must have some vision; must be strong in its product, and must be exemplary for it to exude confidence from its investors. Secondly, when a brand is able to generate free cash without the need for continual investment, it goes a long way into ‘de-risking the business’, which is what every investor desires. In my opinion, these are the two key aspects in building a strong value for a brand.”

Summing up, Pankaj Jaju, Founder & CEO, Metta Capital Advisors LLP; shares, “True value for a brand is when an individual – be it investor or consumer – looks at your brand as something worth ‘giving it a shot’. Basically, it’s when they perceive the Fear of Missing Out to be far intense than the Joy Of Missing Out, will they continue to extend their support to your brand!”

Based on the Retail Leadership 2017 panel discussion ‘Value and Valuation in Retail’. Moderator: Pankaj Jaju, Founder & CEO, Metta Capital Advisors LLP; Manish Mandhana, Promoter, Mandhana Retail Ventures Ltd; Rahul Singh, Founder & CEO, The Beer Café; Bibek Agarwal, CFO, Raymond; Hemant Patel, CEO, Alder Capital

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