Small business owners invest blood, sweat and tears—and often much of their life savings—into building their business…But a recent article in Bloomberg Businessweek this exercise might rattle your assumptions about your brand’s health and prospects.
Approach this evaluation an analyst might: try to determine whether your company represents a good investment. It’s your job to make a “buy”, “sell”, or “hold” recommendation.
Answer the questions on a scale from one (awful) to 10 (excellent) as objectively as you can, keeping in mind that brands rarely excel in every area.
1. Is the brand in a growing sector?
Is your business in a growing economic niche, or a shrinking market? Is this industry going to be healthy and growing, or defunct, in two, five, or ten years?
2. Is the brand making consistent share gains?
Is your brand healthy—gaining market share from rivals in a sustainable way (i.e., not by giving away the store).
Gaining market share requires strategic marketing—including a strong online presence incorporating website and social media presence. If you have not adopted an aggressive
multi-domain strategy, it might be time to consider branching out. Take a moment to search for keyword-rich, related domains that could bolster your brand. ______________________________________________________________________
3. Does the brand have a dominant competitive position?
Even if operating in a growing industry, and even if growing market share, you should still ask yourself: “Has my brand achieved a position of dominance?”
This need not denote “global dominance”; if you serve a well-defined geography, do you own this market? Bigger competitors–whether across town, or on the other side of the world are not a threat if they can’t capture your customers.
4. Is the brand clearly differentiated?
Does your firm genuinely have “the better mousetrap”? When compared to the competition, is your brand clearly differentiated? Or are your products similar to those of the competition? This critical factor affects all others, hence the old marketing adage: “Don’t be better. Be different.”
5. Are there high barriers to entry for competitors?
High barriers to entry include factors such as intensive capital requirements, proprietary knowledge requirements, regulatory barriers, and so forth. Examples include the airline and automotive industries, which are capital-intensive. By contrast, launching a consulting firm requires modest investment and is unlikely to face significant regulatory hurdles. One might argue that the expertise required to launch a consulting firm might be considered a barrier to entry, but one might legitimately question how high that barrier really is.
Note: The wonderful thing about the web is that it levels the playing field: small businesses can acquire a great domain name, establish a solid website and appear as professional and competitive as their rivals.
6. Does the brand generate outstanding margins?
Look at this from two perspectives: in absolute terms, and relative to industry competitors. Margins are; to some extent, a function of your market sector: do you offer clearly differentiated products, and are you operating in a thriving industry—especially one with high barriers to entry? If so, congratulations, you’ll likely maintain healthy margins by comparison with commodity providers competing in a shrinking sector.
7. Is the brand creating strong cash flow?
Public companies face pressures to fund shareholder dividends; because your company is private doesn’t mean that your investors don’t deserve returns on their investment, unless you have consciously chosen to reinvest profits into growing your brand for a period of time.
If your brand scores well on all seven, congratulations—your company is a great investment! Not where you’d like to be? At a minimum, you now have some idea where to focus your efforts.
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