You feel stuck in a boring 9 to 5 job.
You know you can do more with your life.
You have the determination to build your own brand(s).
You want to leave a good legacy for your children.
All of the above are good reasons for starting your own business.
You’ve probably come across hundreds of articles that tell you how easy it is to start your business, get leads and make money, all in a short period of time. And yet 25% of new businesses fail in the first year, and 90% close within 10.
Often times, new entrepreneurs discover the harsh realities of starting a business after they’ve already invested important financial and human resources into bringing their idea to market.
For those of you planning to start on your own, here are some things you should be aware of before launching your new brand.
Every successful brand is backed by a good product. A good product does not automatically translate into a successful brand, but a bad one is a guarantee for failure.
I always stress the importance of offering a good product to the success of a new business during my discussions with new entrepreneurs.
The product is one of the tangible elements your clients come in contact with, touch, feel and use to satisfy their needs. It is the first investment people make in your new brand.
Established brands can survive occasional product failures, due to the amount of consumer trust they enjoy. Young brands don’t have this luxury. Products can build or ruin a new brand reputation, hence the need to get it right the first time.
Don’t think only of physical products, but your services as well. Word spreads quickly, and once negative perceptions start to spread it’s very hard to recover.
Do not launch a product that is not 100% ready to hit the market. In their quest for initial feedback and sales, many entrepreneurs decide to rush a product to market and tweak it as they go along.
Going back to the previous point, an “almost-ready” product might not ever get a chance to be finalised. If the initial version is negatively received, it’s almost impossible to reverse the trend.
What is a “market-ready” product, you might ask? Here are a few contributing factors.
The”market-ready” product performs as expected, with little to no failure rate and satisfies the need it’s suppose to. It does not rely on a technology or complementary product that will soon become obsolete. Finally, the product is offered at a price consumers are willing to pay and is easily available for purchase.
Building brand credibility is a slow and costly process. Creating the basic brand infrastructure (brand identity, communication materials, advertising) used to be prohibitive for new entrepreneurs on tight budgets, but not anymore. From fancy full service agency to websites such as fiverr and UpWork , it is relatively easy to find help for every budget.
Then the hard part begins.
Most of your marketing budget will be spent getting into people’s mind, letting them know your brand exists, and being on their radar when they decide to spend money. This is a slow and costly process for a few reasons:
The choice is abundant, almost intimidating, in almost every category.
Humans are reluctant to new and tend to resist change.
People are busy and always in a hurry (especially in America).
The average attention span is 8 seconds (down from 12 seconds in 2000).
Consumers tend to gravitate towards brand they are already familiar with, even after the occasional disappointment.
More and more consumers use tools to block brand advertising and unwanted email.
As you can see everything seems to work against new brands, so your patience and budget will be stretched to the maximum.
Strategies that involve tangible interactions are most effective in building brand trust and making sales. Regardless of what digital marketing experts tell you, consumers that can touch, feel and try your product have more chances of converting.
In his book “The Revenge of Analog: Real Things and Why They Matter”, author David Sax makes the case, supported by well-documented examples, that people are returning to things and habits digital experts announced obsolete: listening to vinyl, writing on paper notebooks and sticky notes and reading physical books.
In retail, brands that started out selling their products exclusively online have started to open brick and mortar stores for a more palpable, real experience.
According to Neil Blumenthal, founder of New York City eyeglasses company Warby Parker, “People were telling us ‘I want to touch and feel the glasses before buying them.”
I often get asked by people who sell services, such as real estate agents and mortgage brokers for strategies to market their business and get more customers. My advice is always the same: networking and referrals are the most powerful conversion tools; digital advertising doesn’t even come close to providing the same results.
In conclusion, your marketing plan for the new brand should include strategies that involves physically putting your products, and yourself, in front of the consumers as often as possible.
Repeat business is the fundamental sign of success. Generally speaking there are many strategies you can use to make the initial sale.
But if you want to know if your new business is succeeding, look at the number of repeat customers. Those customers have enough trust in brand to ensure its long term success.There are a number of reasons repeat customers are good for any business.
In case of a startup repeat customers mean more than lower cost of acquisition and positive word of mouth; they represent a sign that your strategy is working, and your product, service and messaging resonate with your audience.
Never rely exclusively on a distribution channel you can’t control to build your brand. There is a proliferation of third party retailers, particularly online, that will give you access to their platform to sell your brand, for a fee. You might be tempted to dedicate all your resources to servicing those channels, especially if you see positive results fast.
Starting from scratch and building traffic to your own website is a slow and costly process. Despite all your efforts, you will never come even close to matching the traffic amazon can generate for your product.
You can start selling your brand on Amazon, and benefit from all the instant traffic and demand, in a matter of weeks.
That being said, relying on Amazon to build your business is a mistake, for (at least) three reasons.
First, you don’t own the customer, Amazon does.
Moreover, Amazon may decide one day to ban your product (it happened to me) or to close your account for various reasons, in which case your entire business will simply collapse. Finally, on Amazon you are making a sale, but don’t build a brand.
This is not to say you should not sell your product through third party retailers. However this should be part of an omni-channel distribution strategy, focusing on building a distribution channel you can control 100%.
Always be aware of your financial situation. Although I don’t have any concrete evidence, I am pretty confident the lack of financial knowledge is among the top reasons new brands fail.
Most entrepreneurs don’t have a background in finance. Some of them even hate numbers. They have a great idea, and are determined to succeed bringing that idea to life, regardless of costs.
Unfortunately passion and determination are some of the ingredients needed to succeed.
The foundation of any successful business is its ability to generate profit. That’s not to say new businesses are, or should be profitable instantly. Building a new brand requires investments that will not be matched by revenue, for a period of time. That’s ok, as long as it’s planned for.
Running a business and having no idea of your expenses, revenue, break even point, taxes and other financial obligations, is like shooting in the dark. Regardless of how great and unique the idea, it will end up in failure.
If you are not confident in your financial skills get professional help. It’s the best investment in your new brand you can ever make.
The above is not meant to deter you from starting your business. Au contraire, I am a strong believer that entrepreneurship is the only way to go moving forward. I just want to infuse a dose of reality into your dreams, and prepare you for the long and sometimes challenging road ahead.
Photo credit: Alexandra Galvis on Flickr