Domain Name: A Business Asset
Last week, I chatted with a friend, who I got to know after his company bought an expensive domain name from my company. We got to discussing domain names, and he shared a reason for buying the domain name that I hadn’t considered before: it’s an important business asset.
This might sound pretty obvious, but let me explain it further.
My friend is in a service business. For privacy reasons, I won’t divulge the service area, but think about things like consulting services, medical services, legal services, home services…etc. Essentially any professional service companies that don’t have products or proprietary patents, algorithms…etc. would likely fall into this category.
My friend owns his own company, and he is very good at what he does. If he ever sells his company, there are few “hard” assets.He has employees, but like most employees, they may be transient. His customer data is valuable, but clients may only be loyal to him and not the company. His brand may be valuable in his field, but again, that is likely related to him and not his company as a whole. His company has equipment and office space, but equipment becomes obsolete and I wouldn’t consider the office space an asset (I don’t know if he owns or leases the equipment either).
In reality, he is the company, and he is the most valuable aspect of his business. If he wants to sell his company and retire or do something else, there is probably not a whole lot to sell, despite having a good reputation and being very successful. Some people are totally fine shutting down the business when retirement comes, but I think many people have the desire to build something and sell it.
A keyword domain name changes things a bit. A domain name is something he can sell along with his company. This keyword domain name transcends his brand and can be used by anyone. If he were to get into a sale discussion, the counterparty would probably cite the things I previously mentioned as reasons to not pay much for the company. If my friend were to want to retire, he might not be in a great negotiating position and might need to either take an offer or close up shop. The domain name he bought can be used as added leverage because it will bring other parties to the table. It is a business asset that other companies will want, and it adds to the value of his company.
Before owning the domain name, if my friend wanted to sell his company and retire, he would have had a much more limited audience. With this domain name, there could be more parties interested in buying the company.
I hadn’t really thought about this aspect of domain name ownership before, and I found it interesting.
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