From the March 2004 issue of Entrepreneur

Entrepreneur Chrissy Azzaro has business down to a "T." Well, down to a T-shirt, actually. Azzaro, 28, is founder of My-Tee, a 4-year-old Los Angeles fashion company. Besides its signature product-the My-Tee T-shirt-the six-employee company makes its own line of skirts, shoes, tank tops and accessories that retail from $32 to $78. Publicists and buyers browse My-Tee's trendy showroom in Los Angeles for the latest trends and clothing lines. The company has built considerable buzz: Celebrities from Hilary Duff to Courteney Cox have been photographed in My-Tee clothing. This exposure helped the company rack up $1 million in sales in 2003.

Azzaro defines her brand as sassy clothing that's casual yet sexy. Branding, she says, has built her business. "It pushed us out of the pile of other people," Azzaro contends. "Instead of being underneath 100 T-shirt companies, it pushes you to the top. Branding is very important for any small business."

Or is it? Ask a group of entrepreneurs how much branding really matters, and you'll get different answers. Some think it's really important, while others don't. Each entrepreneur could have a slightly different definition of branding, and a few might not even know, or really care, what branding is. To brand or not to brand-that's the question. And everyone has an opinion.

"Of course people are going to say 'Well, branding doesn't really matter.' It's the most misunderstood concept in all of marketing," says Rob Frankel, a Los Angeles branding expert and author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else (Frankel & Anderson). "Too many [businesses] dismiss branding as just identity. But it's so much more than that."

Branding, say experts, is your raison d'être, the well-planned coordination of every single touch point with the customer to create consistency of service within your company. In the end, branding isn't about getting prospects to choose you over someone else, Frankel says; it's about getting them to see you as the only solution to their problem amid today's media clutter and price wars. Without it, you're dead in the water from Day One. The way to get new business today is by turning your current customers into evangelists. If you don't give them something to evangelize-like your brand message-they'll have no way to communicate it to the next guy, Frankel says. "Your brand strategy should be in your business plan."

Many companies are branding-whether or not they know it, says Bob Phibbs, a Long Beach, California, retail marketing and sales expert, and author of You Can Compete: Double Sales Without Discounting (Greenleaf Book Group). Are you going to be the Tiffany & Co. of small gift shops or the 99-cent bargain store? If you don't know, your customers will decide for you-and that's a risky move for a growing company. "Think about the kids you knew in high school, the dorks and the [popular kids]. We always categorize and want to get a bead on things," Phibbs says. "The most successful businesses are doing well because they have a consistent image of what their brand means. Branding always matters."

Branding, Schmanding

On the other side are those who say focusing on brand is a waste of time and money for a growing company trying to create repeat business in a crowded marketplace. "People spend far too much time early on saying 'I want to build a brand.' Forget about building a brand. Build customers first," says Barry J. Moltz, a serial entrepreneur and author of You Need to Be a Little Crazy: The Truth About Starting and Growing Your Business (Dearborn Trade Publishing).

Moltz says he's seen too many entrepreneurs end up with "analysis paralysis": pondering for months on end what their brands will mean to consumers before they open for business, only to enter the marketplace and find they need a new strategy. Entrepreneurship requires flexibility, say the anti-branders, because your original brand strategy could be completely wrong. Listen closely to your customers, because they will help you figure out your brand. "There are a lot of businesses that start out being one thing and end up being something else," Moltz says. "If you listen to the market, it will tell you what your branding should be."

Azzaro has learned to be flexible with her strategy. Initially, she thought My-Tee's customers were women ages 24 to 38. She's since learned they range in age from 14 to 56. She's also veering toward product lines, such as accessories, that she never imagined the company doing. "You have to go where [the business] takes you," Azzaro says. "Sometimes it wasn't in the plan."

The decision to brand as a growing business also depends on your industry and the size of your immediate market. Branding is less important if you're the only game in town, says Sean O'Connor, vice president of Magnet ID, a brand consulting and identity agency in New York City. But if you own a coffee shop in a small town, and Starbucks moves onto your turf, then differentiating your business suddenly becomes extremely important. Branding can also distinguish small retail companies selling products or services similar in features, benefits and price vis-à-vis the competition. But in other industries, such as technology, customers may not need brand differentiation as much as they just need a specific solution. "If your product doesn't meet the parameters, [technology customers] aren't going to buy from you," says Jim Schakenbach, managing partner of SCT Group Inc., a technology marketing communications firm in Northborough, Massachusetts.

Heavy investment in branding can be the kiss of death for growing companies with limited resources, says Schakenbach, who counsels technology start-ups. He compares modern branding to the 1980s Jack Trout and Al Ries advertising classic Positioning: The Battle for Your Mind (McGraw-Hill Trade), which theorized that companies that win are the ones that best define and capture a particular position in the marketplace. Branding "is positioning strategy dressed up in new clothes," he says skeptically.

Your time is better spent, he contends, figuring out your customers and their pain-that is, the problem they would pay to make go away. Your value lies in the solutions you provide, not your branding. "You can build brand all you want, but if the customer doesn't connect with the fact that this won't make their pain go away, they won't be interested," Schakenbach says. "People don't particularly care what brand an aspirin is as long as it makes the headache go away."

Mike Duda, 35, has built his technology company without a well-defined branding strategy. "As a start-up in B2B, how do you communicate a brand?" says Duda, co-founder and president of Pennant Inc., a Chicago B2B Web site development, hosting and maintenance company.

Duda, who sees branding as the emotional connection companies forge with customers, points to Harley-Davidson as an example of a great brand. But creating a big-name technology brand is different, he says. Just look at Microsoft, which cared more about hiring skilled software developers than creating heavy name awareness in its early years. "[Microsoft] was able to become a market leader. But did their brand get them there? Probably not," Duda says. "In technology, brand evolves over time. People are buying what a technology product will do, not the marketing. Brand can't really deliver value to the customer in the first year of business."

At Pennant, getting referrals from clients was far more important than concentrating on how to build a brand. But Duda says the eight-employee company is reaching enough critical mass to make a branding strategy worthwhile, as it gears up to become one of the top B2B hosting companies in the Midwest. "We're planning to leverage our brand more in 2004. We're working through what that strategy is going to be," he says. "For the vast majority of small businesses, the business takes three years to evolve before you can really sit there and say 'Here's what we do; here's what we're really good at' and build a brand around it."

You Might Need Branding If...
  • A big, well-known competitor moves onto your turf. The Home Depot moves into town. How will you differentiate your small hardware company? It's the question that's killed Main Streets all over America. Figure out the one thing that sets you apart from this business behemoth, and center your marketing around it. (Hint: It probably won't be price.)
  • Your products or services are very similar in features, benefits and price to the competition's. The more interchangeable your offerings are with the next guy, the more you need a "hook" to get people into your store. Is your hook great customer service? Free Wi-Fi access? A complimentary doughnut with purchase? Find it, and tout it.
  • You're expanding into new towns where people don't know your company. Your local customers know you already, but people in other towns don't have a clue what you're selling. This is a good time to educate them about your purpose and mission.
  • Employees don't have a consistent way of dealing with customers. Are employees all over the map in the way they approach, help and resolve customer questions and problems? A strategy can provide consistency and build your brand.
  • Customers can't sum up your product or service in one word. Great brands can be summarized in a word or two. Nike? Running shoes. Microsoft? Software. FedEx? Overnight delivery. Ask your customers to summarize your product or service in one or two words. If they can't do it, you need to work on the messages you're sending in the marketplace.

The Branding Paradox

There's a paradox to branding, says Michael R. Solomon, a human sciences professor of consumer behavior at Auburn University and author of Conquering Consumerspace: Marketing Strategies for a Branded World (AMACOM). The more intangible your product or service, the more you need to brand. Consider insurance, which people buy because they have to, not because they want to. The most successful insurers have developed tangible symbols to humanize an intangible and arcane industry. Traveler's Insurance is known for its umbrella logo; Prudential, meanwhile, touted the instantly recognizable slogan "Get a piece of the rock."

Consumers are bombarded with messages, but they're also looking for brands that speak to them as individuals, Solomon says. Just like Coca-Cola, entrepreneurs should think in terms of brand equity, the value of their company's image factored into the bottom line. The worth of the brand literally becomes a line item in the spreadsheet. Nike's brand alone has been estimated to be worth more than $1 billion. "You can take this logic and apply it to a small company as well," Solomon says. "If someone is willing to pay a dollar extra to get the same food at [your restaurant] than they would at any other place, that's the value of [your brand]."

Shelly Mars believes in the value of branding. Mars, 42, left a career in high-tech research four years ago to launch a high-end organic dry-cleaning company, Ecoluxe, with four locations around the Boston area. Branding played a big role from the get-go. "I always thought branding was important because of my corporate background," she says. "I never thought of it as a negative."

Mars estimates she spent $60,000 on branding in her first year, from graphics and letterhead to signage and public relations. She was very strategic about selecting upscale neighborhoods and giving each location a distinctive look. She decided cleaning would be done at an off-site facility so the stores stay brighter, cleaner and friendlier. She's avoided coupons, thinking they would dilute the brand by focusing customers on price rather than the company's services. And within the community, Ecoluxe has aligned itself with events such as Earth Day to build identity around the brand.

Mars thinks her branding strategy has been worth the investment: Sales increased from $85,000 in 1999 to more than $1 million in 2003, and Ecoluxe was voted best dry cleaner in Boston magazine's "Best of Boston" reader's poll for 2002 and 2003. "Once you're very clear about your message, [branding] is important. And that should be from day one," she says. It's a brand of thinking sure to stir debate for years to come.

Late Bloomer?
Think it's too late to forge a brand strategy? It's never too late. Even if you've been in business 10 years without one, there are things you can do:
  • Take branding beyond advertising. Business owners tend to think of branding as advertising, when advertising is just one element of branding. Instead, envision branding as something that touches every part of your business, from your letterhead and logo to how employees answer the phone to how your supply chain runs. Branding is the integration of everything about your company to create consistency for customers, vendors, employees, suppliers-and you as the owner.
  • Improve your appearance. Image can be everything, whether you're a retailer or an accounting firm. If a storefront is inviting, clean and bright, people will be drawn to you. If it's dark, dank and disorderly, they'll move on. Chalk it up to human nature: Customers assume they'll get better service if your business looks nice. Maybe it's time for new paint.
  • Make clear promises. What's your ultimate promise to customers? Is it quick service, cheap prices or something else? Find your promise-and deliver on it.
  • Rediscover your purpose. Why are you in business? It can be easy to forget 15 years down the road why you started your company in the first place. Revisiting your primary purpose can spur new ideas and clarify your brand message.