Brand Building: The Key to Extending your Cash Runway
Just because it isn’t on your P&L doesn’t mean it shouldn’t be.
I absolutely love working with start-ups because there is so much energy that comes with blazing new trails, following your passions and creating something novel that people will appreciate. They are also the lifeblood of our economy as they create industry which brings in new jobs and stimulates competition which keeps all company’s pulses on innovation and what’s best for consumers. Then why do 50% of new businesses fail in the first 5 years? Simple, they didn’t figure out how to translate their product into a brand before they ran out of money. The difference between a product and a brand is probably the most over-looked yet mission-critical nuance for exponential business growth.
For example, consider what is being sold on the left versus the right?
Both are the same product…water.
Both do the same job…quench your thirst.
The one on the right has some extra stuff in it, you may say, but is it worth 4x the cost? Those who have said “yes” will tell you that Smartwater isn’t just water, it is a reflection of their lifestyle. This is evident across other products and services too. Consider how Post-It Notes sells you a “Brain Processing Tool” versus its commoditized counter-part, paper. Or, how Tide Dry Cleaners sells “Clothing Care” versus just a dry-cleaning service. When you consider that over 90% of decisions are made by the heart center, it becomes evident that the big difference between a brand and a product is that a brand is delivering against a higher-order emotional benefit. This creates more tangible value which in-turn can command a higher price point, drive more loyalty, attract more users, and create more impact. For start-ups and small businesses, this also means higher valuations for investors and exit strategies. If you don’t believe me, watch a few episodes of Shark Tank or The Profit.
Here is what businesses who build brands understand that start-ups often times don’t:
Brand Building Needs to Start Day 1: I frequently hear, “I will think about ‘marketing’ later”, or “I am just concentrating on getting the product right so I can get funding.” First, don’t confuse “Brand Building” with “Marketing”. “Brand Building” is the equity or the identity of your brand and “Marketing” is how you talk about it. So, how you build your brand early is directly correlated to the ease at which you will be able to market it later whether it is to customers, investors, retailers or BigCo’s. Do you think products or brands command higher valuations? If you didn’t choose brands, see above.
A Product Name Does Not a Brand Make: You don’t have a brand until you can explicitly and clearly articulate: 1) Who am I? 2) Why am I different? 3) Why do you want me? This is how you will get to that higher-order emotional benefit that you will be selling. This will then DEFINE your brand identity (name, look, tag-line, etc), not the other way around. I have seen too many start-ups arbitrarily define these attributes at the beginning just to have to invest more time and money later to re-brand because they ended up with a product they couldn’t differentiate from competition... which is what? A commodity. And in case you were wondering, commodities are products.
Brand Building Isn’t Easy: It is why BigCo’s have huge marketing teams, agencies and money to devote to it…all things you don’t have. But resist the urge to go hire people early. Start-ups generally can’t afford to hire expert brand builders, but virtually all can afford to freelance or contract them. Joint ventures, like the one I am part of, Your Brand Growth, have the holistic experience based on their time spent in and working for BigCo’s but understand the entrepreneurial spirit and can therefor scale appropriately. They can also advise in how to pull in extended resources that will drive the desired impact without breaking the bank.
To sum up, start Brand Building early, think about it strategically, and get the right people to guide you.
Anne’s Note: As always, I hyperlink to brands I love so I can share the love with you.