5 Branding Myths to Stop Believing if You Want Your Startup to Survive

Startup founders have a tremendous range of tasks: from product refinement and customer acquisition to pitch-decks design and conversations with investors. In such extraordinary environments, brand building is often far from being a priority. It's curious to notice that successful startups start working in this area even prior to their launch on the market. 

If you do not focus on the brand on purpose, it is shaped randomly.

Without any deliberate efforts, the brand will be built chaotically, and potential customers and investors may perceive the company in a totally different way than the founder wants. In order to ensure this does not happen, here is the truth about some common mistakes:

Myth #1: We are still small, it is too early to build a brand

Reality: brand formation begins with a startup idea.

The brand is being created even before the founder finds the first employee. When a team pitches an idea, this moment already brings out the value of the product and forms an opinion about it. When the founders test out a prototype, for example at Kickstarter or Product Hunt, they already shape their brand, position the project and set the reputation of the team.

Besides the target audience and value proposition, the startup brand broadcasts the mission, principles of the founders and what the team is fighting for in this universe. Having clear answers to these questions will even help startups to find their soul-mate investors. It is worth pointing out that at the pre-seed and seed stages, the VC's invest not only in a solid business plan, but also in a highly motivated team and their passionate eyes.

Test yourself: no matter what stage of planning or implementation the startup is at, you need to stop and think: "why do I get up in the morning, how do I want to change the future?”. In this question is the root of your brand. If the answer is the exact same as the one that the team does, you are on the right track.

Myth #2: We created a naming, a website and a logo. The brand is done.

Reality: a brand is more than a name and a symbol.

The logo, the color, the website are just communication tools for your brand.

Logo and brand: illustration of a creative agency Stone Soup

First, you define what your brand is about, and then you deliver it to your users through a variety of channels. Positioning should be visible at every point of interaction, from support communication style to application design and advertising layouts. Therefore, you will be able to pick up the name, logo and communication that perfectly convey your concept only after you have determined the essence of the brand.

Test yourself: ask the team, investors and loyal customers just one question. How can they describe your project in one sentence? If the answers don't match, the first thing you need to worry about is not communication instruments, but building a unified brand image for your team, investors and clients.

Myth #3: It's better to spend money on advertising rather than brand development

Reality: investments in brand building are considered as investments in the long-term success of a startup and have nothing to do with activation of sales expenditures.

Targeted advertising, SMM, email marketing, analytics and conversion optimization is the foundation you need to set up properly. Once a performance base functions well, building a brand reinforces it. indisputably, it is easier to calculate the return on investment from advertising and customer acquisition costs. However, systematic  contribution to the brand-enhancing capabilities creates added value and increases the startup's capitalization. A strong brand attracts the strongest candidates on the labor market, boosts trust and customer loyalty, and drives the interest of journalists and media.

The IPA (the Institute of Professional Advertising, created by the largest UK advertising agencies) researched how different types of communication influence the long-term success of a startup. The graph shows that advertising expenses only result in a temporary upturn in sales, which is followed by a cyclical downturn (yellow curve). At the same time, investments in the brand accumulate and lead to more robust sales growth in the long term (orange curve):

Test yourself: Google your startup, your name and the names of other founders. What do you see and do you like it? This is the minimum homework that should be done, because the Internet and acquaintances are the main sources where investors and potential clients will search for you. Setting up advertising and paying for clicks does not address this need strategically, so start by focusing on what Google has to say about you without advertising.

Myth #4: We will figure out how best to position the brand by our own efforts

Reality: external advisors will provide better assessment of the situation from outside of the box. 

The startup team is frequently deeply immersed in a project and it is very tough for them to abandon not the most successful ideas, messages or target audiences. But this is actually a crucial component of the brand building process.  Currently, startups have plenty of possibilities to get feedback from experts and industry leaders, including unpaid consulting and investor's support.

As a team in the VC I work for, we actively participate as mentors in Ukrainian Startup incubator. During our web meetings we give startup founder's an outside look at the product, help them not miss out the focus and clarify that investors also value their credibility. Venture funds strive to invest in powerful brands, so they support startups in maintaining their focus on clear brand positioning and brand building.

Test yourself: do you understand where your strength lies? Name one thing that your clients and investors appreciate about you. If you understand the centerpiece of your work, everything is in place. But if you have lost your own compass, the fastest way to find it is to ask someone from outside.

Myth #5: We will present the startup by analogy to give the investor a better understanding

Reality: the essence and positioning of the startup is better explained in the founder's own  words.

Investors frequently encounter teams that explain their business model by analogy, i.e. use a comparison with another brand that is understandable and well-known to everyone.  For example: we are Uber for relocation, or monetized as Spotify. 

You can actually speak this way if you only define the business model, and only for investors. But most often these phrases indicate that the founder is unable to interpret the start-up concept in one straightforward sentence. 

Test yourself: imagine that you need to tell your grandmother the idea in a couple of words. How would you do it? She is not aware of global brands and will not understand the terminology of industry slang. This is an excellent filter for the simplicity and clarity of your brand.  If you can't convey the essence of the brand in understandable words, this is the first red flag that your positioning might be blurred.

Summary

Debunked misconceptions about startups prove that many early-stage projects do not prioritize the brand building process. It is believed that this issue can be taken up later, when there will be paying customers, increasing sales and explosive growth.

However, this is not an issue that will ever need to be addressed, it is a strategically important work that begins when an idea comes up. And if this work is not done purposefully, the brand will be formed chaotically from the very outset, without any control of the founders' side.

To eliminate this possibility, it is crucial to begin working on a brand as early as possible.This is a way to obtain an asset which will successfully operate on the startup and boost profits over the entire life cycle.