The Definition of Value Is Changing — What Entrepreneurs Need to Know

Entrepreneurs have worked long and hard to create wealth and build dynasties by creating value in the market and finding unique ways to solve problems. But in recent years, the way entrepreneurs approach this has changed. This often involves placing a portion of profits into a savings account to act as a hedge to protect the health of the company during market downturns or the need for liquidity to pay payroll. It included allocating to Another way was to generate profits, increase net worth, take member draws and have the money work for you by investing it in real estate or stocks.

But the world is changing, and with it the idea of ​​what is valuable. Entrepreneurs need to understand this latest landscape to take advantage of these changes and continue building multi-generational dynasties.

Value has historically been defined by finances, tangible assets (art, land, real estate, etc.), and other net worth building factors. However, the modern collective mentality is changing the meaning of the word “value” in today’s world.

Related: The key to maximizing value in today’s rapidly changing and competitive business environment

What people consider important today is rapidly changing from what it was 20 years ago. Laptop or digital nomad lifestyles are in vogue, and business owners are starting to invest in other opportunities early, such as digital currencies, other businesses, and more flexible means of value creation.

This is part of what has led to changes in the distribution of wealth. Millennials and Gen Z Take control of your spending power and open up your interpretation of what is considered valuable.young generation Value experiences more than products or thingsAnd they use those assets to expand and enrich those life experiences.

For example, if you offer someone in their 20s $100,000 in cash or $100,000 in a travel experience, most people will choose the travel option.

As an entrepreneur, what is considered valuable in order to know where to put your time, energy, and resources, and what kind of companies to build, invest in, and join in today’s world? It’s important to know. In the past, entrepreneurs might have kept large amounts of cash in savings accounts to power their businesses, but with recent bank failures, entrepreneurs are now unsure of their worth and the value of their companies. We are looking for other safe havens to ensure value is maintained. And they will be available. Here’s what’s going on and what you need to know about how values ​​are changing.

How do values ​​change?

Since time immemorial, value has changed in the form of delivery. We used to trade beads and rice, then we focused on fiat currencies, but now we are moving towards blockchain and digital currencies.

As technology continues to accelerate the rate of human progress, what we actually use to symbolize our values ​​will continue to change. That’s because our values ​​of time, energy, and life experiences have evolved beyond just survival.

The old systems of acquiring value, investing value, and accumulating value are disintegrating, leading to a change in the meaning of value.

People are valuing more freedom than their homes, cars, and belongings. Freedom of experience. freedom of time. freedom of expression. freedom of opportunity.

Fiat currencies and tangible assets are no longer reliable. In fact, research shows that there is a growing trend to establish alternative trade routes in other countries, and entrepreneurs are concerned about the long-term value of the dollar. Entrepreneurs are turning to international vehicles, currencies, and other categories outside the United States to diversify their wealth and businesses to survive. Rather than depositing fiat currency in a bank account or counting the number of computers and company equipment in a commercial real estate office as the only option that provides business value, they preserve that value and personally Looking for valuable assets.

Tried and true methods are not enough. They want to diversify by holding other asset classes as backup. This may include collecting hard assets such as valuable art, jewelry, and collectibles. In a minimalist society that values ​​time above all else, assets need to be mobile so they can easily access the experiences they want.

Related: How to build an impressive investment portfolio

how value is perceived

Because of the pandemic, people value your time as an asset than previous generations. People no longer wait and assume they are wasting their time. This is why entrepreneurs are young and start businesses early in their lives, the magazine said. Entrepreneur Center. Due to the global isolation due to the pandemic, people feel the need to make the most of their lives in every possible way. This awakening has revolutionized what people value and how they want to run their companies.

How is value experienced?

If you want to hedge against inflation and market downturns to strengthen your business, consider ways to grow your asset portfolio. How someone experiences their assets is directly correlated to how they experience their life and the purpose they are meant to serve.

For example, some people like to collect art and hang it on their walls or display it proudly in a gallery. Some other collectors have art vaults that haven’t been entered in the past 20 years, where portraits passed down over the past six generations are just gathering dust.

For the safe’s owner, the $30 million in art purchased by the business is of no use. It may or may not be accumulating more wealth for them, they are not admiring it, and it is not being used in a meaningful way. Therefore, a vault owner’s collection may not be considered valuable to them because it does not enrich their lives and is costly to maintain. Not all investors hold the same value in the same asset. It’s a personal decision that goes beyond financial gain, but also includes considerations for mental and emotional health.

But for a collector who spends time admiring the brushstrokes of Impressionist paintings each week in a gallery, that person may feel that his or her art collection expands creativity and well-being, and thus brings value to life. yeah.

Related: How to use alternative assets as a hedge against inflation

Overall, things are different now.

There is a big difference between materialism and lived experience. For previous generations, materialism equated to wealth. Their net worth was tied to their possessions, which was consistent with their values ​​as human beings. However, today’s generation values ​​lived experience above all else. Assets should be used to improve life and please the senses, which is why travel is so coveted. The key to an asset being considered of high value today is, in part, because it can be easily leveraged to create a more lived experience, be converted into cash, transferred, or serve other pressing personal or business needs. It is related to the ability to be fluidized. Therefore, the more flexible and mobile an asset is, the higher its subjective value.

The current housing market, stock market, and other traditional investment opportunities have people asking a variety of questions about their valuable hard assets.

There are several questions you should ask to choose the asset that best suits your diversification needs.

• Will I still want this in three years?

• Is this an asset that fits my current lifestyle or the lifestyle I want?

• Is this asset exchangeable for something else?

• How quickly can I sell this if I no longer need it or need cash for business or personal needs?

• Will this asset increase my time freedom, or will it take away time I would like to invest in other experiences?

• Did this asset come from money, stocks, or other assets?

• Will this asset continue to accumulate value naturally?

What each entrepreneur, investor, and asset holder perceives as valuable is unique to them. So when you buy or acquire an asset, you need to know what it will do for you, how it will hold its value, whether it will provide you with cash flow, or whether it will give you more freedom of time and space. Be clear about how quickly you can liquidate the funds to meet them. About payroll and other urgent business and personal needs and their value in your life. Adding tangible assets to your portfolio can help stabilize your personal net worth and provide security for your company over the coming months and years.