Your company is trying to make its mark, but do you have a formal plan to develop a definitive reputation? More often than not, a firm's reputation is not deliberately honed- just happens. This passive approach ultimately falls short of clearly defining who you are to customers, vendors and other partners.
In "Reputation Building: Small Business Strategies for Successful Venture Development" (Journal of Small Business Management, April 2003), Albert Goldberg, Gilat Cohen and Avi Fiegenbaum looked at small firms in the same industry that were between 8 and 12 years old and their reputation-building strategies. They found that small, growing firms that actively pursue formal reputation strategies do so in one of four categories: image-visibility, core competencies, dynamic exploitation and partnering. The least successful of these is image-visibility, since smaller companies generally don't do a good job of crafting a well-coordinated plan for single image, widespread visibility in the marketplace. Technically oriented smaller companies often overemphasize a one-dimensional focus on product development, but the most successful core competency strategies involve developing a range of internal strengths. The focus of dynamic exploitation is rapid sales and growing profits in the short term, at the expense of establishing long-term links to the market and partners. And partnering with a wide variety of firms does not in itself ensure a solid reputation, because customers may not recognize anything distinct about your business other than its varied alliances.
The most successful way to build a reputation combines three of the strategies: developing numerous core competencies, forging solid partnerships and presenting a well-defined corporate image. Hone a wide variety of internal strengths, then link those as a package to numerous outside alliances, while emphasizing a single message about your company's focus and abilities.
David Newton is a professor of entrepreneurial finance at Westmont College in Santa Barbara, California. For more journal summaries, visit www.techknowledgepoint.com.
David Newton is a professor of entrepreneurial finance and head of the entrepreneurship program, which he founded in 1990, at Westmont College in Santa Barbara, California. The author of four books on both entrepreneurship and finance investments, David was formerly a contributing editor on growth capital for Industry Week Growing Companies magazine and has contributed to such publications as Entrepreneur, Your Money, Success, Red Herring, Business Week, Inc. and Solutions. He's also consulted to nearly 100 emerging, fast-growth entrepreneurial ventures since 1984.