Clean up your image: Building brand value
When you’re caught up in the day-to-day operational issues of running a manufacturing business, it’s easy to overlook the importance of branding. Yet beefing up your brand name can strengthen sales. It also may improve your ability to attract capital for growth, as lenders are more willing to consider intangible assets such as brand value in making financing decisions.
Your image
Whether you know it or not, you’re already doing branding. For better or worse, your customers associate your brand name with your business.
The company that manufactures a kitchen mixer that gets handed down for generations, for example, has a better brand value than a firm that gains a reputation for making washing machines that have a history of leaking.
It may be a challenge to fix the leak problem, but it’s even harder to fix your image. It’s worth the effort, though, because a solid brand can demonstrate value where it counts — the bottom line.
Brand value
To successfully build brand value, you must establish your core competencies by asking your customers and employees how they feel about your company. If they see you as service oriented and cost effective, don’t try to link your brand to luxury.
Instead, focus on what you do right today — and what you can continue to do right in the future. For example, if you’re making tires that last 40,000 miles and sell for $50 less than the 50,000-mile brand your competitor produces, emphasize cost and reliability rather than longevity.
Recognize, though, that building brand value is about more than advertising. Every time one of your employees puts the customer first in handling a problem or complaint, it’s affecting your brand name. Every time your lead time is shorter than that of your competitors, you’re building brand equity.
Don’t overlook the value of giving people a glimpse of your supply chain, either — particularly if it doesn’t stretch halfway around the world. If you can emphasize that your products are made in America, with American components, you’re telling people you’re protecting American industry.
If you get components from China, or have subassembly plants outside the United States, focusing on your global capabilities may imply strength and solidity.
Strong brand = better borrowing power
Brand value can translate to sales, certainly, but it also can boost your borrowing power, according to a March 2007 survey by Venture Finance. The survey found that 7% of small to medium-size businesses are borrowing against intangible assets such as their brands or intellectual property.
Even though the vast majority of business loans are still based on physical assets, such as machinery or stock, it doesn’t pay to underestimate the value of building brand value. Building a brand takes time and money, but the potential return on that investment can be significant — if you spend enough time and money up front.
Add strength where it counts
One pitfall to avoid with branding is emphasizing aesthetics over content. Don’t become so focused on the color of the logo that you lose sight of what the logo represents. Your name and reputation are on the line every day. By building them up, you’re also reinforcing your most important asset: the bottom line.
For more information about our services to inventory based businesses,
Contact: Mark Walker, Partner, Director of Inventory Based Businesses Practice at 817.882.7724.
The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.