BrandCraft 1: Why You Have to Build a Brand to Grow Your Business

You will never create anything big unless you make it a brand- whether a bank, musician, university, toilet paper, politician, search engine, fast food restaurant, Computer, soft drink, charitable organization, media house, clinic, law firm, athlete, church, etc.If this is a fact why do so many entrepreneurs and SME Business owners work so hard to grow their business without trying to make them brands? They invest time, money and effort to develop innovative and quality products, systems, hiring the best sales people, selecting the hottest business names, tag lines, company colours and creating logos.But is this not what brand building is all about? Yes and No.Yes because this is the first half of building a brand and a big NO because this is the smaller half. In a three step brand development continuum where the lowest level is a commodity, second step a label and the highest a brand when you have the best you can achieve with all these efforts is a label.A commodity is an undifferentiated product, service or company. A label is one has identity that is differentiates it from others businesses or product offerings of same kind. But a brand has emotional and psychological connection with a sizable market segment. There is a form of love relationship between the brand and its target customers.Every human being by the mare fact that he has unique finger prints, name, DNA, mannerisms and behaviour is a label. He has an identity. He is different from other men. But Nelson Mandela, Barrack Obama, Billy Graham, Michael Jordan are brands. As long as you define your uniqueness using the physical and biological characteristics you will always be a label. You may be a brand but only to a few. That also applies to businesses.Many entrepreneurs and business owners are working very hard to build labels. They want to bake the sweetest cake, sell the highest quality of furniture, be the consultant with the most tools, be the best doctor in town etc. They talk in terms of lowest price, best quality, good location, fast service etc. They wonder why their business doesn’t grow and hope that by working harder things will be different. The sad truth is that unless and until they are able to make their business brands they will remain small.They need to come to the realization that the vehicle that will carry their businesses to growth is making brands of their products and businesses.Building brands has many advantages to a business but I want to focus only the ones that play the biggest role in driving revenue and profit growth.1. Help Create a Monopoly for your Business: Everyday there are many businesses started and products rolled out in the market with the aim of offering the customer variety of choice. In essence the market is out there for everyone to fight it out to for. Fighting out to be seen, considered and be bought. With a label you have to keep on trying many things to achieve one or more of these objectives.The market forces are always seeking to push any product or company to the lowest level of a brand continuum – a commodity. They push brands to labels and labels to commodities. That is why some brands of yesterday are just labels.Whatever business you are in, you should know it is easier to multiply your profits and revenues if you are a brand rather than a commodity or label. You should therefore look for a way to deal with the market forces that want to push you down. You could either ask the government to declare you as a monopoly or you use the only other alternative of creating a form of monopoly power – create a brand.A brand becomes a tool that aids you in creating and owning your market segment. It helps you become friends with this market. You develop an emotional connection with it. When you own this market then you can unleash the business multiplier machine on it. This multiplier machine operates on the logic that you can only grow your business profits and revenues by getting more people buy more of your products, more often.Labels and commodities have to spend so much to win a new customer, spend even more to keep them and get them to buy more. It is harder and more expensive to unleash the multiplier machine on labels and almost impossible on commodities.2. Growth through new productsIt is very difficult to grow any business beyond a certain point just on one product offering or product line. At some point, even for those who own a particular market for a certain category of products, you will need to add something new in your fold. The reason being that the market tastes, preferences and circumstances are always changing hence they will require new products. Competitors will pursue your customers with a better value propositions. To respond you will need to create new products and services.Majority of SME Owners are innovators who have brought into the market something new. They appreciate the effort, resources and time required to make a new product succeed. Even for large organizations with massive resources it is never easier and there are no guarantees. That is why they build brands which are better equipped to launch a new product. Brand offer some level of success assurance.Without a brand they will have to go through the pains and overcome the countless challenges of new product launch whenever they need to introduce a new flavor, launch a new product, complementing service, open a new store, and add a new feature etcetera. Every time you do this the customer sees you as new. You don’t have a point to leverage on your business experience, market knowledge, capacity, supplier networks etc which you have invested in over time. This heavily limits you chances of success. A brand ensures you the benefits of being an old friend.’NEW ‘as a selling proposition works only for trusted brands. For them NEW is considered innovative and progressive. For labels and commodities ‘NEW’ is viewed as risky and inexperienced. Anything new has to be sold, and as a sales expert I understand selling is tough work worthy doing only when you have to do it.If you are in the technology business you appreciate how fast you have to generate and deliver new products to the market. Without a brand as a vehicle through which you have to deliver your new innovations you are doomed from the start.3. Build Business for the Long TermCommodities experience high rate of ‘child’ mortality. Labels usually a have a life expectancy of their creators. Brands have a life of their own.Every entrepreneur I know starting or running a business has a desire to see his business outlive him. To do this lawyers recommend you register your businesses as limited liability companies and management consultants tell you to create business dependent on systems. This is wise counsel but only to some extent because they help separate your business from your body and mind but you still share the soul.When you give up your soul the body and mind of your business will not live too long after.A brand is the soul of business. It makes it alive. It stops being a robot supported by a legal document. It becomes an organism that can have relationships of its own; it can love and be loved. It has connections with its market, employees, suppliers etc.Many of the big brands today are growing strong without the entrepreneurs who founded them because they are brands not because they are limited liability companies or they have great systems. A branded business is the only form of business that can grow on its own. Any other form will require the passion and genius of the founder to grow it.If you really want to leave an inheritance to your children then need to make your business a brand.These three points are not exhaustive but, if they would push you to be more determined to build brands or even to add a little knowledge on the subject then am happy.Wait for Part 2 where we will discuss how SMEs try to build brands the wrong way and how they can do it right.

Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Shoe Repairs And Several Other Things When I Was 7

Shoe Repairs And Several Other Things When I Was 7
My Dad repaired most of our shoes believe it or not, I can hardly believe it myself now. With 7 pairs of shoes always needing repairs I think he was quite clever to learn how to “Keep us in shoe Leather” to coin a phrase!

He bought several different sizes of cast iron cobbler’s “lasts”. Last, the old English “Laest” meaning footprint. Lasts were holding devices shaped like a human foot. I have no idea where he would have bought the shoe leather. Only that it was a beautiful creamy, shiny colour and the smell was lovely.

But I do remember our shoes turned upside down on and fitted into these lasts, my Dad cutting the leather around the shape of the shoe, and then hammering nails, into the leather shape. Sometimes we’d feel one or 2 of those nails poking through the insides of our shoes, but our dad always fixed it.

Hiking and Swimming Galas
Dad was a very outdoorsy type, unlike my mother, who was probably too busy indoors. She also enjoyed the peace and quiet when he took us off for the day!

Anyway, he often took us hiking in the mountains where we’d have a picnic of sandwiches and flasks of tea. And more often than not we went by steam train.

We loved poking our heads out of the window until our eyes hurt like mad from a blast of soot blowing back from the engine. But sore, bloodshot eyes never dampened our enthusiasm.

Dad was an avid swimmer and water polo player, and he used to take us to swimming galas, as they were called back then. He often took part in these galas. And again we always travelled by steam train.

Rowing Over To Ireland’s Eye
That’s what we did back then, we had to go by rowboat, the only way to get to Ireland’s eye, which is 15 minutes from mainland Howth. From there we could see Malahide, Lambay Island and Howth Head of course. These days you can take a Round Trip Cruise on a small cruise ship!

But we thoroughly enjoyed rowing and once there we couldn’t wait to climb the rocks, and have a swim. We picnicked and watched the friendly seals doing their thing and showing off.

Not to mention all kinds of birdlife including the Puffin.The Martello Tower was also interesting but a bit dangerous to attempt entering. I’m getting lost in the past as I write, and have to drag myself back to the present.

Fun Outings with The camera Club
Dad was also a very keen amateur photographer, and was a member of a camera Club. There were many Sunday photography outings and along with us came other kids of the members of the club.

And we always had great fun while the adults busied themselves taking photos of everything and anything, it seemed to us. Dad was so serious about his photography that he set up a dark room where he developed and printed his photographs.

All black and white at the time. He and his camera club entered many of their favourites in exhibitions throughout Europe. I’m quite proud to say that many cups and medals were won by Dad. They have been shared amongst all his grandchildren which I find quite special.

He liked taking portraits of us kids too, mostly when we were in a state of untidiness, usually during play. Dad always preferred the natural look of messy hair and clothes in the photos of his children.