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Start-up companies and for that matter, companies that have already been established often fail to see the relationship between proper branding and visual identity and the results they have on their bottom line. I do not say this because I run an online logo design company but rather because of facts and research that is available out there.

8 times of 10, my experience when conversing with a potential client, we tend to spend a lot of time discussing why the budget for getting a logo design is so high, relatively speaking, and why they should invest that on their company brand identity. It starts with the premise that the client does need a logo design or brand identity and are looking to get this done in the least amount of money possible.

I do understand that budgeting for a small business, especially one that is in its infancy, is a very critical aspect and the business owner needs to keep an eye on it to ensure proper cash flow. However, a company’s logo design is the first step in building a robust business. It has the power to create the right impression – the first time and every time. A great logo leads the way to great branding which in turn influence every aspect of the business – right from the visual to the emotional and beyond. And you can not get this effect by going for unprofessional options or by crowdsourcing your logo.

If you look at any of the big brands in the market, you will notice that most of the noise they generate around their marketing campaigns are based on visual stories and brand impact. They spend untold amounts of pounds trying to burn their logo and brand into our subconscious. Of course, every great brand has to be backed by a great service or product. Assuming you have a great product or service, your brand is next in the line of assets that you could use to influence your target market.

The Budget Farce

When I am not designing logos and brand identities, I spend time helping small businesses with business development and sales increase. I consult with both big and small companies and try to provide an insight into effective methods and campaigns that could help increase their revenues. During this exercise, I always look at the budget the business has set aside for various things. This gives me an insight into the priorities of the company and the likely hood of success or failure.

Most often than not, I find that logo design and branding is at the bottom of the list with the least percentage of the budget allocated. In case you are wondering – no, I do not make these businesses spend money with us. In fact, these businesses are already our clients. The amount allocated to the logo is sometimes less than the bill for the drinks at the launch party. I am not kidding. Another time, I saw the budget for the fancy business cards the client got printed was double that of the logo design. Now, don’t get me wrong. You definitely need premium cards to create the right impression since your business card is your handshake. But the logo and branding on that card would speak volumes about your company. Much more than the quality of the card stock. But you got to treat your brand like a person and invest accordingly.

I think it is a psychological barrier. Spending money on design – which does not appear to really do anything other than make you look good – seems to be a “waste”. That is how our brain processes this activity. It is not considered an “investment” but rather an “expense”.

The Opportunity Cost

When you spend less than you can afford to on your brand identity, you may be saving a few bucks but you are incurring a huge opportunity cost. An opportunity cost is defined as the following according to Investopedia:

The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

So, when you decide to invest less on your branding, your opportunity cost may not be visible right away and in monetary terms. But it would have a deriding and detrimental effect on the amount of money you make because of the lost opportunity of creating the right kind of impression on your potential clients.

A great example of an opportunity cost that could lead to a loss of revenue is pricing. It has been proven beyond a doubt that better branding presentation and presence can lead to high pricing of your service or product. Of course, pricing is depending on a number of factors but having a professional and awesome image is one of the factors.

I worked with a client a while back who was charging around £25 per hour for her copywriting services. Her old logo was her name in simple Ariel font and as a consequence, her website did not have an inspired branding about it. Once we create a stunning looking logo, she then went on to update her website to reflect the new brand which in turn boosted her confidence to actually raise her prices and almost doubled them. The effect of a “brand” gave her the confidence to charge more. And her clients were willing to pay the new rates without batting an eyelid.

I agree that this is not always possible and would depend on market conditions, competition and the nature of the product or service, but this is just one example of an opportunity cost.

Cliched Anecdotes

I know this is a cliched anecdote but I can not help mention it here. Consider you are going to an interview. You are highly talented and have the required experience and skills to back that up. However, would you not agree that the way you present yourself, your dressing and the way you talk plays a HUGE part in whether you are going to snag the job or not.

Another example is when you are going to a dinner party. You need to dress the part to make an impression at the party and be considered seriously. If you are nodding your head sideways and thinking that you are not the type of person who would try to impress people at a dinner party then I must say that you are going to find it tough to develop your business. Because the principle is very important to consider even if you personally would not be inclined to think that way.

For more reasons on why you should not cheap out on your branding, read this article.

Let me know your thoughts and experiences with this by commenting below. Have you seen any benefits or the lack of your branding efforts? Do you consider branding a waster of money at the very least, an expense?

Mash Bonigala

Mash B. is the Founder & Creative Director of Logo Design Works. Since 1998, Mash has helped thousands of businesses express their brand messages through creative and award winning logo designs.