Let’s say you’re running a small business and you’re not happy with your brand (logo, marketing materials, website, etc.). When you first started your business, you used a crowd sourcing website to create your logo and initial website design. The initial brand development process didn’t cost much money, but you kinda think it shows and that it might be one of the things preventing you from charging the rates your more polished competitors do.
Guess what? You might be right.
Starting a company is tough stuff, but building a trusted, authoritative, valuable brand is much, much harder. Of course, like ownership, building a recognizable and trusted brand is worth the effort.
According to Mark Buckshon, author of Construction Marketing Ideas, “as your [brand] value increases, you will capture even higher prices and margins.” As another example, look at Apple vs. other consumer electronics manufacturers.
I’ve been helping small business owners with branding, advertising, and marketing for a decade. A lot of small business owners recognize that a professionally designed brand can dramatically increase the value of their company, but it’s tough to stomach the cost. When do you stick with the DIY approach to branding vs. hiring a pro to handle it?
Here are the questions you need to ask and answer in order to point your business in the right direction (the 3 questions you must ask before re-branding):
Question 1: Are you consistently making money?
Pull out your Income Statements for the past year. Are you consistently making money (net profit)? Have you reached the point of financial self-sufficiency where the net profit from your operations more than covers your overhead?
A self-funded (aka. bootstrapped) business that’s burning more cash than it brings in each month must be extremely frugal. At this stage, the vast majority of your marketing budget (maybe 90%) should be directed toward testing, and ultimately finding, at least two marketing channels that generate new customers profitably.
Some small business owners, especially those with fragile egos, eschew my advice. When it comes to their new company’s brand, they want to “act as if.” They want to make their new company look like they’re already successful right from the start. If you’ve got gobs of cash, you can try to go this route, but in my experience, it rarely works.
When I think of a local company that tried to go BIG with branding from day one, I think of CycleLife USA. Located on the Georgetown waterfront in Washington, DC, CycleLife USA was a well-funded, luxury bicycle retail store. They spared no expense on anything–from their building to their branding.
Unfortunately, the fancy logos, buildings, and all around great branding can’t in and of itself make a non-viable business viable.
Question 2: Are you really profitable or are you faking it?
A lot of small companies claim to be consistently profitable, but later I find out that it’s a mirage. To be truly profitable, you must generate a consistent net income without discounted expenses.
For example, let’s say you own a company and also function as the company’s president. If you’re only profitable because you take a ridiculously low salary, you’re not really profitable (or at least not as profitable as you claim to be).
Along the same lines, your positive net income must include a marketing budget of at least 5% of revenue. If you’re not operating in the black with a minimal marketing budget, you’re over estimating your company’s profitability.
Question 3: Do you have at least two profitable customer generation channels?
Before you hire a professional to brand or re-brand your company, you’ve got to have at least two ways to generate new customers profitably. It doesn’t matter what the customer generation strategies are—direct mail, referral programs, PPC, SEO, email, etc.—as long as they allow you to generate new customers with money to spare..
For example, let’s say you can afford to pay $500 to acquire a new customer (and still generate a little gross profit). If you close 50 percent of your leads from a pay per click campaign and the same campaign has a cost per lead of $200, you’ve got one of the required two profitable customer generation strategies.
The Right Way to Approach Branding for Your Small Business
Until you reach financial self-sufficiency with a minimal advertising budget and two identified, profitable customer generation strategies, you’ve got to be frugal when it comes to branding. That may mean taking a do-it-yourself approach or finding a family friend with a graphic design background. Whatever you do, at this stage, just don’t get sucked into hiring a branding badass—you’re not ready yet.
Of course, everything changes once you can confidently answer “yes” to the questions above. At the three yes phase, it’s absolutely worth hiring a professional to assess all your brand assets and help you come up with a strategy moving forward. That’s what we’ve done at Blue Corona and the difference it has made has even me doing a double-take.