What Are Invisible Assets?

Susan Grindstaff

Invisible assets are valuable attributes that are not tangible, meaning they cannot be touched or seen with the naked eye. This term is most often associated with business, but can apply to individuals as well. Two of the most common invisible assets include reputation and recognition of name or brand. The benefits of some types of invisible assets can be measured and are often included on a company’s balance sheet. These can include assets attributed to patents and development and research.

Man climbing a rope
Man climbing a rope

On an individual basis, invisible assets such as reputation and name recognition can be of enormous benefit. Persons with these types of assets often have an easier time gaining and keeping employment, securing loans, and garnering standing within communities. These types of assets are particularly helpful to those seeking leadership positions, especially in politics. Many leaders on both national and local levels were able to advance their political careers based on these types of assets. Some political engineers argue that without these assets, it is nearly impossible to have a career in politics.

In business, name recognition is considered one of the most valuable invisible assets, as companies and businesses that are old and established are often more trusted by consumers. It is generally believed that most people view company longevity as a value with which to measure a company’s worth, as well as the quality of the merchandise, service, or product they represent. This is one reason that start-ups can have a difficult time competing with established businesses.

Reputation can be linked with name recognition in defining the invisible assets of a company. Companies that have survived over several years of business often do so because they work very hard at establishing a good reputation. Some factors that play an important role in reputation are customer service, reliability, and fair trade practices.

Patents, research, and development are generally considered invisible assets because even though they can be measured or counted, it is often nearly impossible to determine their impact on profitability over the long term. In many cases their value may not be obvious for many months or years. One example of an intangible asset that includes research, development and patents is a pharmaceutical company researching a new drug. A new drug may not be available to the public for several months after it has been developed and patented, however, it would still be an asset to the company even though it would not as yet have generated any income.

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