How to Apply the Concept of Highest and Best Use to Your Business
In some cases, terms that are commonly used in one industry, such as real estate, can also apply to other industries and fields, with a small amount of tweaking. One such term is “highest and best use.” Commonly used in real estate to determine how to use land, applying the concept of highest and best use to your business can also help it to grow or to help it develop a strategic plan.
What is Highest and Best Use?
In real estate, highest and best use is a principle used when a parcel of land is being zoned and/or appraised. The value of land is closely tied to how an owner uses it. For example, if the owner of a plot of land in the business district of a big city decides to build an office tower on the land, that is generally a better use of it than if the owner decided to build a shopping center on the land. Setting up a farm on a plot of land in a rural area is generally a better use of that land than creating a parking lot, especially if the area is sparsely populated.
The location of the land isn’t the only factor that comes into play when determining highest and best use. Competition and timing also play a part, as does the physical limits of the land itself, legal barriers and and finances. If a lot of other companies are constructing office buildings in the same area, at the same time, deciding to build your own office tower might not be the highest or best use of that land.
How it Can Help Your Business
The principle of highest and best use doesn’t have to be restricted to the area of real estate. You can also apply a similar concept when making decisions for your company. The principle works when deciding how to spend your time, whether to make a hire or to outsource a certain role or task, or whether to keep a product or discontinue it.
Let’s look at the principle of highest and best use when it comes to your time, either as the CEO, president or owner of your business. You want to find ways to spend your time that create the greatest return on investment for your company and that help your company become as valuable as possible. But, if you are spending your days making sure that your employees are completing their assignments or tasks, you’re most likely not making the highest and best use of your time as a CEO. Instead, it might be in your company’s best interest for you to spend your time laying the groundwork for the business’ next step or figuring out how to move the company forward.
Deciding to hire a new employee or to outsource certain tasks to a virtual CFO can help you make the highest and best use of your time as the CEO. But, the principle also comes into play when deciding to outsource or hire someone.
Outsourcing certain roles lets your current employees make the best use of their time, especially if the position you are outsourcing involves tasks or assignments that only need to be performed sporadically. Instead of having your administrative assistant try to solve any IT problems that arise, outsourcing those tasks to a vendor can be the best solution for all involved. The same is true when it comes to your company’s financial records. If you have been handling them, hiring a part-time bookkeeper or working with a virtual CFO allows you to make the highest and best use of your time and energy, and the highest and best use of that person’s talent and time.
The team at New Direction Capital wants to help your business grow and succeed. To learn more about what you can do to make the highest and best use of your company and of your time, give us a call today.