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Every Entrepreneur Must Do These Two Things

A little girl puts a table in her front yard. She sets out glasses and a big pitcher of lemonade. She ties a few balloons to the back of a chair, letting them bounce in a breeze that provides only a little relief from the summer sun.

If you saw her setting up, you might think she was preparing for a friend’s birthday. You might wonder if she was planning a party for her teddy bears. But the moment you see her hang a big sign on the front of the table that announces, “Ice Cold Lemonade, just $1.00!” the mystery is solved — you know that this little girl is an entrepreneur.

Her business may be very small, but every organization must adhere to the fundamental laws that govern all entrepreneurs. Every entrepreneur must do two things: create an offering and communicate its value. You have to have something to sell. You also have to tell people about what you're selling. You can't have an exchange until you do both of these things. Even something as simple as trading a glass of lemonade for a dollar requires an understanding of what products and services are available and what a customer must pay for those products and services.

THE OFFERING

The offering consists of the full range of products and services your business provides. Most entrepreneurs start with a pretty clear idea of what they want to offer, but they may not have refined that offering to appeal to different audiences, determined the best way to deliver each offering, or found a compelling way to communicate how the offering fits into the broader marketplace. But in today’s world the answers to these questions have become the difference between success and failure.

Modern consumers can choose from an endless variety of products and services. We can buy them online or over the phone or in a traditional store, and we can easily compare prices, features and options. We also have access to an enormous amount of information about businesses and their offerings. We can read what a business says about itself but we can also read reviews and see photos provided by people we’ve never met. A fundamental change has taken place: the consumer is no longer limited by what the entrepreneur chooses to offer or what she says about her offering.

THE DIFFERENCE

With all these options, how do we decide what to buy? For most of our purchases, what we know about the offering makes the decision possible. We may be interested in the lowest price or a certain set of features. We may want convenience or personal service. Each business tells us what to expect, and we make a decision based on that information. In a world of endless consumer choice, your communications define your business and separate it from the competition; they tell people what to think about your offering and provide the rationale for a purchase.

Your communications will attract some customers and turn away others. They will generate feelings about your business. They will communicate your values, and define your place in the market. Today, developing the right communications strategy is as critical to entrepreneurial success as developing the right offering, and it must be developed in the same way.

Building communications infrastructure is not unlike building every other part of your business. For example, one of the first tasks of every business is to create accounting systems to collect revenue, pay employees, purchase inventory and track customers. Every employee will use parts of this accounting infrastructure in the tasks they perform as a regular part of their jobs: they turn in expense reports, make sales and buy supplies with the different accounting tools they’re given.

In the same way, your business must build communications systems that will be used to communicate what you’re offering to everyone you do business with. Your communications infrastructure includes the words a waiter uses to describe the lunch special, the website that a support person refers customers to, and the brochures a salesperson hands to prospective customers. On this site, we’ll use the word “communications” to describe everything that conveys information about your business: everything heard, seen and felt by every person who interacts with your company in any way.

A Mental Image: The Brain Is Where The Brand Lives

If I say “fast car,” one or two specific brands may pop into your mind. The same is true for “expensive car” or “safe car.” If you hear the word “Ferrari,” do you think “speed” or picture a racetrack? What words describe Volvo? Rolls-Royce?

Mental associations between ideas and products are a critical part of how you choose what to buy, and entrepreneurs work very hard to create these associations. Auto makers have worked for decades to reinforce specific concepts, carefully creating mental links between important concepts. Take a look at the front pages of three automobile manufacturers in the gallery below: Volvo, Ferrari and Rolls-Royce. The words they want you to associate with their brands are very clear.

The front page of the Volvo site features a wrecked car — a seemingly odd choice for an auto maker. But it's clear that "Volvos will keep you safe" is the primary idea you should take from this image. Rolls-Royce uses the word luxury twice, but you probably had that word in your mind already. Ferrari doesn’t have to use words like “fast” or “sport” — photos tell the story. These companies have communicated the same ideas over and over for decades to make sure that you clearly understand the primary message of the brand.

GALLERY

A brand is a mental image. Each business has a brand. Each celebrity and politician has a brand. And your business has a brand, whether you choose to create it intentionally or not. Your brand — the mental image we have for your company — includes everything you say about your business, but it also includes everything that other people say. It includes all of the experiences people have with your business, the products you sell and the services you offer.

Brands are products of the mind. And just as each of us has our own thoughts and feelings, each of us carries a slightly different mental image for each of the companies we interact with. I may think of Volvo as “safe” but you may think of it as “boring” even if we’ve been exposed to the same messages. These mental images are the tools we use to make decisions about what we will buy and who we will do business with. As such, they are critical to the success of every entrepreneur.

Fortunately, there are some simple rules that will help us understand how brands are built and what we need to do to create strong, effective brands.

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Branding: It Ain't Just For Cowboys

A brand is a mental image. “Branding” is the full set of activities that entrepreneurs engage in to build these mental images.

Branding includes everything from your website and your signs to the way your store looks and the way your employees treat your customers. Branding also includes polices and procedures — infrastructure that ensures your brand will be maintained for the life of your business.

When your branding activities successfully create an image in the mind of a consumer it helps them make a decision about what to buy. If automobile safety is one of my primary concerns, I’m almost certainly going to take a look at Volvo. The company has been associating its brand with that word for decades, and the consistency of their messaging has enabled the brand to consistently attract a particular set of consumers. In this way, they have set themselves apart from other car makers like Rolls-Royce and Ferrari. Even though a Rolls may be just as safe as a Volvo, “safety” has not been the primary message behind the brand. Effective branding establishes an image for your business while differentiating your business from your competitors.

These mental associations take time and require maintenance. Spending time and money to build a brand is similar to purchasing a piece of equipment that will be used to manufacture products — it enables a business to generate income over the long term if it is regularly maintained and repaired. Branding is a long-term investment*. A strong brand can improve customer satisfaction, enable expansion, improve new product launches and create a loyal customer base. If you're interested in building a company that will generate revenue for several years, you should invest in your brand in precisely the same way you would invest in quality equipment or talented employees.

(*This distinction is, however, unrelated to accounting principles and practices. Consult with a qualified accountant to choose the right way to expense branding activities.)

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Marketing Vs. Branding: Confusing Terms, Clearly Defined

As your business grows you may decide to attract a new demographic or to encourage old customers to visit your business again. You may want to change or add to your offering with improved products or new services. You may decide to open new locations or offer temporary discounts to increase short-term sales. These business-building activities require short-term communications, and these communications should build upon and expand your brand (the overall mental image of your business). "Branding" refers to long-term activities that speak to everyone, including your employees, vendors and the media. "Marketing" activities use your brand to appeal to a particular group of people for a specific reason, usually for a predetermined length of time.

After you build your brand you will still need to maintain it, and repair it if it becomes damaged. You may decide to upgrade your website or buy a bigger sign that can be seen from the highway. You may realize that people on your staff aren’t giving customers the right information and decide to invest in training. These are branding activities, which are general in nature and appeal to everyone.  But if you want your business to grow, you will need to use your brand to develop specific communications that expand your customer base — you will need to do some marketing.

“Marketing” activities are designed to accomplish a specific goal. A marketing campaign leverages an existing brand to expand the customer base, announce new locations, promote new products and service offerings, or reach new demographics. Generally, a marketing program has a specific audience and a specific goal, and will be conducted for a specific period of time. Advertising campaigns, public relations, seasonal promotions and sales events all fall under the auspices of marketing activities.

MARKETING

  • alter the logo for a short period
  • create a new page, new graphics or alter the design of a site to promote a specific offering
  • advertisement
  • an event that occurs each summer
  • sponsorship of a single nonprofit event
  • training staff on seasonal specials
  • setting up policies and procedures to be used during a sales event

BRANDING

  • a logo
  • a website
  • a permanent outdoor sign
  • weekly specials that repeat all year long
  • multi-year nonprofit sponsorship
  • training staff how to ring up purchases
  • setting up policies and procedures to be used in all daily operations
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Branding Vocabulary: A Summary Of Terms And Definitions

Brand:

You have developed a mental image — a summary of information, feelings and experiences — for each business you interact with. That mental summary is called a “brand.” Everyone who interacts with your business, including customers, employees, vendors and people who see your ads, builds a mental picture of your business. That picture is slightly different for each person. Brands change over time, and they can be either positive or negative at any given moment.

Branding:

Branding activities include everything a business does to generate a brand, from advertising campaigns and web sites to interior design and in-person communication between employees and customers. One shoe store may create a luxurious in-store experience while another may place large numbers of boxes next to sale signs: branding is the work done to create these two different experiences.

Communications:

Communications include everything a company says to everyone it interacts with, including both marketing communications and interpersonal communications. This includes everything that someone sees or hears: a billboard, a website, an email sent by someone on your staff, and what a cashier says to a customer.

Marketing:

A marketing activity is any specific communications activity designed to achieve a specific goal. Marketing activities are often focused on a specific audience and usually occur over a defined duration. These activities include advertising campaigns, sales events, new product launches and the opening of new locations.

Offering:

The "offering" is everything that a company offers — all products, all services and all communications. The includes products and services, but also includes the communications that distinguish those goods and services from similar offerings in the marketplace. Two different car dealerships both sell cars and trucks, but one offers Ford brand vehicles and the other offers Toyota brand vehicles. They sell similar products, but their offerings are different. It is the communications — the signs, the logos on the cars, the brochures and websites — that distinguish these two offerings in the minds of consumers.

Please note: the words above are used in different ways by different people. The definitions for these words will be used consistently throughout this site, but may not be defined the same way on other sites or in other publications.