Redefining the Concept of Value

Value means something new now. Let’s see what business people should understand to make the most of these changes.

Glenn Burgess

Entrepreneurs have always strived to grow their wealth and create lasting legacies by adding value in the business world and coming up with clever solutions to problems. But in recent times, their approach has been evolving.

In the past, they used to set aside some of their profits in savings accounts as a safety net for their businesses during tough times or for when they needed quick cash for things like paying their employees.

Another common strategy was to make money, increase their net worth, take some profits for themselves, and then invest those earnings in things like real estate or stocks to make their money work for them.

However, the world is changing, and so is our understanding of what’s valuable. Entrepreneurs must grasp these changes to keep growing their family legacies.

Traditionally, value was mainly measured in terms of money, physical assets (like art, land, and property), and other wealth-building elements. But the modern mindset is shifting how we define “value” in today’s world.

What people find important today is changing rapidly compared to just 20 years ago. The trendy lifestyle is all about laptops and being a digital nomad. Business owners are also getting into opportunities earlier, like digital currency & more flexible ways to create value.

This shift has caused changes in how wealth is spread out. Millennials and Gen Zers are now the ones with the most spending power, and they have a different view of what’s valuable. Younger generations prioritize experiences over things, and they use their resources to make their life experiences richer and more fulfilling.

For instance, if you gave someone in their twenties a choice between £100,000 in cash or £100,000 worth of travel experiences, most of them would pick the travel option.

As an entrepreneur, it’s crucial to understand what’s considered valuable today. This knowledge helps you decide where to focus your time, effort, and money, and what kind of businesses to start or invest in. In the past, entrepreneurs might have kept a lot of cash in a savings account to protect their business.

But with recent bank problems, they’re now seeking safer ways to preserve their value and their company’s value. This is how the concept of value is changing, and it’s important for you to stay informed.

How values change or evolve

The concept of value in how we exchange things has been changing throughout history. In the past, we traded items like beads and rice. Then we started using paper money (fiat currency), and now we’re moving towards blockchain and digital currencies.

As technology keeps advancing rapidly, the things we use to represent value will likely keep evolving. This is because our understanding of what’s valuable is shifting beyond just basic survival.

The traditional methods of earning, investing, and accumulating value are breaking down. This shift is redefining what value means to us.

Instead of putting a high value on owning houses, cars, and possessions, people are placing more importance on freedom. They want the freedom to experience life, manage their time, express themselves, and seize opportunities.

Fiat currencies and physical assets are no longer the only go-to options. In fact, entrepreneurs are becoming concerned about the long-term stability of the US dollar as other countries explore alternative trade routes. Entrepreneurs are looking beyond their borders to international currencies and assets to diversify their wealth and businesses.

They’re seeking assets that not only retain their value but also hold personal significance, rather than simply stashing money in a bank account or counting the equipment in their office as their sole business assets.

The traditional methods alone are no longer sufficient. People are exploring other types of assets to have a safety net. This might include collecting valuable art, gems, or collectibles. In a society that values time highly, assets need to be mobile and easily accessible to enable the experiences individuals want to have.

The perception of value

The pandemic has caused a shift in how people view time as a valuable asset, especially compared to previous generations. People are no longer willing to wait around and assume they have endless time to spare.

This is one reason why entrepreneurs are starting businesses at a younger age, as noted by the Centre for Entrepreneurs. The global lockdowns during the pandemic have made individuals feel the need to maximize every aspect of their lives.

This awakening has brought about a significant change in what people deem valuable and how they want to operate their businesses.

The way value is perceived or felt

If you want to safeguard your business against inflation or economic downturns, it’s essential to think about how you can grow your portfolio of assets. How you experience these assets is closely connected to how you experience life and what purposes you want them to serve.

For instance, some folks enjoy collecting art and proudly display it on their walls or in their galleries. On the other hand, there are collectors who have a vault filled with art they haven’t looked at in 20 years. In this vault, portraits passed down through six generations simply gather dust.

For the vault owner, the £30,000,000 worth of art they bought for the business isn’t doing much for them. It might not be making them wealthier, they’re not enjoying it, and it’s not serving any meaningful purpose.

So, for the vault owner, their collection might not hold much personal value because it’s not enhancing their life, and there are costs associated with maintaining it. The value of assets isn’t the same for every investor; it’s a personal decision that goes beyond financial gain and also takes into account mental and emotional well-being.

But for the collector who spends time appreciating the details of Impressionist paintings in their gallery every week, that person might feel that their art collection enhances their creativity and happiness—thus adding value to their life.

It's clear that times have changed significantly

In the evolving landscape of wealth and assets, there exists a profound shift in values between previous generations and today’s generations. Materialism, once synonymous with wealth, was deeply tied to the accumulation of belongings.

These possessions were not only a measure of one’s net worth but also aligned with their personal value system. However, the contemporary focus has shifted towards what is known as the “lived experience.”

For today’s generations, the primary currency of wealth is no longer the mere possession of assets but the quality of life experiences they enable. Assets are no longer static trophies but tools meant to elevate life and stimulate the senses. This shift in perspective is why travel has become an increasingly coveted pursuit.

The true value of assets today lies in their ability to enrich life, provide joy, and facilitate new experiences. The versatility of assets in enhancing the quality of life and their potential to be liquidated or repurposed for immediate personal or business needs makes them highly valuable.

Flexibility and mobility have become paramount in assessing the subjective value of assets. The ability to easily mobilize an asset to create new experiences or convert it into a different form has become a key consideration. The concept of “liquid assets” takes on new significance, as individuals seek assets that can quickly be turned into cash or utilized for other purposes.

Given the changing dynamics in the housing and stock markets, people are asking different questions when evaluating their assets. To help choose the best assets for diversification needs, here are some critical questions to ponder:

Long-Term Desire: Will I still desire this asset in three years?
Lifestyle Alignment: Does this asset align with my current lifestyle or the lifestyle I aspire to have?
Tradeability: Is this asset tradeable for something else of value?
Liquidity: How quickly can I divest this asset if the need arises, whether for personal or business reasons?
Time Investment: Does this asset enhance my time freedom or consume the time I would prefer to invest in other experiences?
Resource Allocation: Does this asset draw resources away from other assets, such as money, stocks, or other investments?
Value Growth: Does this asset naturally appreciate in value over time?

The perception of value varies from person to person. Therefore, when acquiring an asset, it’s crucial to clarify its purpose, how it will retain its value, whether it generates income or provides more freedom, how easily it can be converted into cash for emergencies, and how it enriches your life. Incorporating tangible assets into your portfolio can help ensure the stability of your personal net worth and the security of your business in the years ahead.