How do I define the added value of my company?

Value added is considered as an indicator that measures the growth and stability of a company. It provides insurance on the company’s future to partners, customers and banks, among other things. However, value added describes a complex reality that goes beyond the simple framework of numerical data. Center.

Added Value: What is it?

Added value is the new value created by a company during its production cycle. To evaluate this, we must subtract from production (as measured by turnover) the value of intermediate consumption, that is, goods and services integrated into a product or destroyed during its production. It measures the contribution of a company to the total output of the economy. This serves as the basis for the calculation of Value Added Tax (VAT).

Value added is classically defined as “all the assets created by a company”.

The added value of a company is the additional value it creates on goods or services from third parties (suppliers, service providers, etc.).

Too broad a definition to understand your business challenges.

So, for example, a company manufacturing wooden furniture. The company manufactures its own furniture and then resells it. So the company orders a certain amount of wood to be converted into all kinds of furniture. Hence it applies a set of techniques, know-how and skills. And this set has costs: employees, energy used for production, and many other things. In so far as these various costs are not an excessive burden on the added value, they generate an added value by the company within the framework of its industrial and commercial activity.

Another example to better understand the notion of added value, that of a fabric negotiator. The professional buys batches of fabric which he then sells to companies in the same sector. Added value is low. In fact, the company buys and resells its goods immediately and does not offer any change operations done. His only strategy is to buy and resell.

These two examples illustrate in a simple and practical way what exactly is the added value created by a company. It is the result of all the changes that a company can apply to a product, or to one or more raw materials, for commercial purposes.

Increase the added value of your company to sustain the activity

Value added is essential for the proper functioning of a company. To take the example of a fabric trading company, the company sustains itself financially thanks to the margin generated only from the purchase and resale of its fabrics. But this margin is limited given the low value added to the product. However, a company that implements a particular know-how can significantly increase margins due to this significant added value. If luxury market products are so expensive, it is because of the unique and original manufacturing processes, which are often long and precise. These testify to a historical information and without any competition.

Thus, in order to increase the added value created by your company, do not hesitate to develop the know-how of a particular skill. They will make your product unique in the eyes of the customers. A simple distinction that you can give to your product can multiply the economic result of your company. So learn how you can identify where you can improve your product, differentiate it from the competition, and thus add added value, and assure your company of reliable economic health over the long term. . The added value you can create thanks to innovations in manufacturing, distribution, after-sales service, customer relations, human resources… which means that when customers talk about you, they spontaneously cite your added value Let’s give

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