A Good Corporate Reputation

A quick Google search defines a reputation as the beliefs or opinions that are generally held about someone or something.

The reputation of a business is the opinion of the organization by its internal and external stakeholders. A company’s reputation is based on its past actions and the probability of its future behavior. Its reputation is an integral part of the goodwill of the business, that part of business value over and above the value of identifiable business assets.

The reputation of a business can be its greatest asset. Companies that have good reputations are thought to provide more value than those with poor reputations; they attract better staff; their customers are more loyal and often willing to pay a premium for their products or services. Companies with good reputations often enjoy higher price-earnings multiples and market values and lower costs of capital.

In an economy where 70% – 80% of market value comes from intangible assets such as brand equity, intellectual capital, and goodwill, businesses are especially vulnerable to anything that damages their reputations.

Benjamin Franklin once said, “It takes many good deeds to build a good reputation, and only one bad one to lose it.” If Mr. Franklin were here today, he would suggest business owners proactively build the reputation of their business, monitor it regularly, and promote it seriously.