Are Startups Neglecting Critical Components like Branding?
All around the world, startups have riveted our attention as they have become important engines of growth and development to economies. Looking at the Indian startup ecosystem from a vantage point, the view is breathtaking. Over the last two decades, the landscape has been growing progressively with startups attracting global investors while taking on larger problems, head-on. But this success is owed to only 10% of Indian startups while the others are faced with insurmountable levels of pressure, and fail within the first five years of their inception.
A promising startup, needless to say, hinges on an innovative idea and a solid business model. But this is not sufficient to propel the business forward. In fact, how innovative, technically sound or how feasible the business model is, needs to be determined, before moving ahead. But not all entrepreneurs are techies, legal experts or businessmen to understand and evaluate all aspects of their model. And to get expert opinion, a steady influx of funding is required – for which, angel investors are aplenty in our country. Yet, startups fail to raise sufficient investments (or none at all), or do not know how to manage the unbridled supply of money, and end up blowing it up before their ideas take wings.
The biggest concern around funded startups is that, if there is an initial, unplanned splurge, it might leave very little for reserves. And for this reason, startups are encouraged to fend for themselves. But there’s a bigger concern over non-funded startups – even if their pockets run deep, how long can they endure financial pressures? And when the capital is insufficient to get expert counsel, quality plummets. Because let’s face it, funding is an important sign of validation.
For instance, a non-funded startup could have a diminutive budget for branding, hoping that it can be increased after they break even. But for the business to kickstart, a portion of the capital needs to be set aside for branding. When there is a dissonance between what needs to be spent and what can be spent, there’s an unavoidable gap. To avoid such situations, non-funded entrepreneurs go to freelancers or smaller agencies which might have two consequences:
- For the allocated budget, freelancers or smaller agencies might not be equipped to create a quality brand identity that will sustain, thereby bringing down the value of the brand itself.
- Or because smaller agencies and freelancers are required to deliver quality work with a meagre budget, the market value of the industry also drops.
From the quality of the logo design to a thoroughly-researched brand manual – everything takes a beating. If the visual identity is not in place, it becomes a liability rather than an asset to the business. With inadequate funding, it’s downhill from there. Brand identity is a foundational piece to any business. If a company doesn’t have a clear identity, there will be an inconsistency. Marketing will be convoluted, and spreading the word will become difficult. Startups, therefore, should absolutely invest in brand identity.
It doesn’t stop there. Adequate funding will help startups figure out the legal structure, investigate and apply for business licenses, rent retail or office spaces, secure coverage and even set up an accounting system.
While it is important for startups to be independent and mindful of their spending, it is equally important to understand that initial spending on strengthening the brand cannot be neglected. As they say, it is all about first impressions!