Starting Your Own Business? Read This Branding Reality Check First

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

The Future Of Business is Entrepreneuship

Hamdi Ulukaya, Founder of Chobani Yogurt (photo courtesy of inc.com)

I recently read the story of Chobani, the  famous brand of Greek-style yogurt.

The company founder, Hamdi Ulukaya, a Turkish emigrant, arrived in the US to study English and ended up building a company that has become the category leader with $600 million in revenue.

What an inspiring story!

What’s really fascinating is the courage,  passion, marketing instincts and simple strategic approach the owner used to succeed in a highly competitive segment.

A true entrepreneur.

Since I deal exclusively with new entrepreneurs and family-owned businesses, I was privileged to get an inside look at how their business is run, and what it takes to compete against the big corporations. Based on my personal observations and the latest economic trends I believe the business model of tomorrow is based on entrepreneurship.

Here  are my top five reasons why:

Determination To Succeed

It’s not easy to start and grow a business. Many of us studied and worked hard to build a successful career in the corporate world. The steady income, a fairly predictable work schedule, good benefits-those are strong reasons that hold people back from starting on their own.

Successful entrepreneurs have the courage to make drastic changes to their careers without looking back. They are risk takers and doers who usually start from the bottom. Their determination and desire to succeed leads to bold and quick decisions, and the ability to make changes when needed.

Efficient Decision-Making Process

The ability to make quick decisions is a natural advantage that entrepreneurs have over the big corporations.

The competitive landscape changes fast. New trends are emerging overnight, and consumer loyalty is shrinking. Decisions such as launching a new product, kill an unprofitable category, refocus their market approach or entering a new market have to be made and implemented quickly in order to keep up with the competition.

While big corporations struggle to find their path to respond to demanding shareholders, entrepreneurs are the ones generating new ideas and building their brands faster. And this is a key competitive advantage in tomorrow’s fast-paced business environment.

True Customer-Focused Approach

The pressure public companies face to meet the profit expectations lead to sometimes irrational decisions: rapid expansion into non-core categories and markets, poor product quality control, and implementation of automated services that eliminates any form of human interaction.

Most entrepreneurs know that maintaining a personal connection with the consumer is what’s keeping their business running. And a better quality product combined with the more personal nature of the service makes for a very strong differentiation strategy.

“Small” is Back

This has nothing to do with the famous advertising campaign for Volkswagen Beetle. It has to do with globalization, the economic reality that is affecting what and where we shop.

There are strong signs that consumers are very willing to support the independent, small local business. Shoppers prefer the better quality product, personalized options and more human way of doing businesses versus dealing with faceless, profit-driven corporations run by Wall Street.

Local manufacturing will also make a comeback, as more consumers prefer to support local economies and buy products made locally.

Changes in Labour Market

Youth unemployment is at an all-time high. In some parts of the world one in two young adults can’t find work. Gone are the days of good paying “employee-for-life” type jobs.

In the developed economies the biggest cost of doing business is labour. In order to remain competitive big companies are offering new hires lower wages and less benefits.

Many young professionals realize that they will have to make it on their own in order to earn a decent living. That’s how entrepreneurship is born.

Although most family-owned businesses struggle to compete with big box stores and multinationals, consumers are on their side. With the proper emphasis of their competitive advantages they will succeed.

What do you think the future of business will look like? I am very interested in your thoughts and predictions in the Comments section below.

Additional ( interesting) reading:

How Turkish ‘Dairy Boy’ Hamdi Ulukaya Started $600 Million Chobani

How Fage Lost the Greek-Yogurt War

Independent We Stand-A Movement of Independently-Owned Businesses