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The Top 5 Reasons Why Small Businesses Fail To Consider Branding as a Priority, and the Consequences

Updated: 5 days ago

It's a mistake for small business owners not to prioritize branding because it impacts so many aspects of their company. A weak brand image for a small business can have dramatic consequences, even if not visible, since there's no possible comparison with what things would look like with a stronger brand.

These entrepreneurs know what they think they're saving by not investing in branding. Still, they're happy ignoramuses because they have no visibility on what they're not gaining – let alone on the consequences they will have to deal with in the long run, for example, when reselling their business.

The short and medium-term consequences include lower sales and margins, higher marketing costs, longer sales cycles, random customer loyalty, complicated cross-selling, almost non-existent customer self-selection, greater difficulty in raising funds or obtaining loans or advantageous payment terms, greater exposure to competition, and hindered economic resilience. The list of unwanted and often unsuspected side effects is indeed very long...

But then why don't small (and medium-sized) business leaders pay more attention to their company branding? The reasons are many and can be very specific or very personal. But generally speaking, here are the five most common situations I've encountered in my career.

Lack of Understanding

Many small business owners need to fully understand the importance of branding and how it can benefit their business. They may see it as a superficial aspect of their business rather than acknowledging it as an essential aspect of their overall strategy and, ultimately, the very embodiment of their company's reason for being.

Other times, there's like a dissociation between practice and theory, in the sense that some entrepreneurs see the success of the strong brands around them, but for one reason or another, they don't think they have to apply the same principles to their own business. It's as if the big brands they admire were evolving in a movie while they themselves were in a reality where rules are different.

Another common misconception I've seen is that branding is a thing for big corporations rather than for smaller companies. Reality check: it's actually the exact opposite. Branding is how small companies became big corporations. In that sense, it is primarily for smaller companies that wish to grow.

Never hesitate to dream big, and formalize your big dream as a brand vision to follow. Remember, Amazon, Apple, Microsoft, Chanel, Tesla, and others started small in their own category and context. But those who were seriously brand-conscious right from the start, by nature, by culture, or by discipline, went successful.

Limited Resources

Entrepreneurs often have limited resources and believe branding is an expensive activity (it used to be, and depending on how you approach it today, it still is), and may prioritize spending on more "practical" aspects of their business such as inventory, tactical marketing, equipment, or staff. This can lead to neglecting the development of their brand.

However, today, with AI and free design resources, for example, and abundant literature, it is possible to develop top-notch branding and a solid brand strategy for very little money. Then implementation and expansion will come on top of it, of course. Still, there are many cost-effective ways to quickly become a dominant brand in one's category, especially if you learn how to leverage dual branding.

At the end of the day, good branding is not about money but dedication. And rest assured that the results compensate for the costs incurred over time.

Short-Term Focus

Small business owners may focus on short-term goals and obliterate the long-term benefits of investing in branding. Most still need a long-term vision and strategy for their business. They prioritize short-term sales (one year is short term, medium term is five years and beyond, long term is ten years and more, sorry to disappoint) and revenue over building a solid and recognizable brand that, as a matter of fact, is supposed to outlive them.

There is definitely an irony here because going through the steps of a complete brand strategic platform and identity allows one to find their unique purpose and develop a clear long-term vision that will ALSO serve and enhance short-term goals. That's what it's made for, actually.

Fear of Failure

Some may be hesitant to invest in branding because they fear their brand may not be successful or make a difference or because they fear being exposed and judged, especially when being advised to develop a personal brand and leverage dual branding. Without entering into self-development or psychology, I recommend you investigate any inner limitation or limiting belief you may have in this regard because it directly impacts your chances of success. Some solo entrepreneurs I've met also needed more confidence in their ability to develop a solid and influential brand, which is an unjustified apprehension nowadays.

Lack of Knowledge and Guidance

This leads us to the next block: some small business owners may need access to the knowledge or guidance required to develop a solid and effective brand. This can make it difficult for them to prioritize and jump into branding, not because they need to understand its importance in the success of their business, but because they need to know how and where to start.

Designing the visual aspects of branding without having set the strategic and identity parts is sterile and can even be damaging. Before doing anything in design, you need to understand the theory, the rules, and how brand strategists think, and you need to get your strategy platform, naming, and identity right. There are many books, programs, and tutorials that can help you gain the knowledge you need, and cheap tools and platforms, like Canva, will facilitate the design part for professional results.

In the medium and long terms, investing time and effort in branding will pay off for any business; there is no doubt about it. And in the short term, most companies will see results in just a few months. I have done A/B testing with some companies, taking some of their products and selling them with a different, better branding to see if it made a difference... the results were self-explanatory.

Neglecting to invest in branding can severely limit the growth and success of a small business. It is the main success block for most small businesses, even if they don't realize and can't nail it as such.

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