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Sunk Costs? Forget About Them |
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Written by Julie Legrand
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Thursday, 10 November 2011 00:00 |
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In my new favorite podcast – from the Freakonomics guys – Stephen Dubner talked about “The Upside of Quitting.” The podcast covered a lot about why people quit various career paths, but it got me thinking of a simple concept I learned in b-school about sunk costs and how this applies to marketing.
Sunk costs are basically money you’ve spent in the past that are partially or totally irretrievable and should be irrelevant to future decision making. Their converse is opportunity costs. Per Dubner “Opportunity cost is about the future. It means that for every hour or dollar you spend on one thing, you’re giving up the opportunity to spend that hour or dollar on something else – something that might make your life better. If only you weren’t so worried about the sunk cost. If only you could …. quit.”
The term “sunk costs” come from the oil industry that focused its decision-making based on expected cash flows rather than on how much money was spent in drilling it. Today the concept is frequently used in finance which uses a mathematical approach to making a variety of decisions. Why don’t we do the same in marketing?
I can’t tell you how frequently I speak with people who are unhappy with their brand (or website), but don’t want to spend any money on it because they already had wasted a ton on poor designers / bad platforms / poor implementation. They waste a ton of time and money trying to hobble along with brand that doesn’t work, but aren’t willing to take another stab because they’ve already spent so much money on it.
We believe there’s a logical flow to building an effective marketing program is as follows:
STRATEGY ==> 2) BRAND ==> (3) COMMUNICATION
Most of the entrepreneurs I’ve met who go out and hire designer agencies to do #2 or #3 before they’ve done step #1. They have an idea for the business and the first thing they do is go out and get a logo - either spending $279 at logos.com or even worse, spend $5,000, $10,000 or more with a high end branding agency to build a brand that doesn’t reflect the strategy. As a result, these businesses often end up unhappy with the results. But instead of looking at their investment as a sunk cost and lesson learned, they continue to try to fit a square peg in a round hole.
The good news is, if you’ve been at it for a while, you will have more information to help build a strategy and thus a great brand. The bad news is, your bad design might be integrated in your product and you’ll have to make lots of changes once you build a new one. If a better brand or website presents an opportunity to grow the business, then go for it. And the sooner the better. Yes, you might have to reinvest in something you’ve already built, but those costs are sunk. Just forget about them and move on to success. |
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Last Updated on Friday, 11 November 2011 00:02 |
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Business or Personal Brand |
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Written by Julie Legrand
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Thursday, 15 September 2011 00:00 |
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I often run into people wondering what they should name their company - use their name or create a business name. Now that I’m a marketing consultant and my product is essentially me, I’ve struggled with the decision of branding myself, but in the end went with a corporate brand for the following reasons:
1) The corporate brand offers me the opportunity to grow the business with other people. With a personal brand, clients will expect me to be working on their project, but with the Corporate Brand clients can expect anyone on my team to serve them
2) A good corporate brand can quickly convey what you do. I had been working under a personal brand until one night it just dawned on me that I help people get their businesses “off the ground”, and thus the name. And people seem to get it. Makes marketing easy.
3) Corporate brands are easier to sell. As the founder of SmartsCo, we build a great deal of equity in the brand name. It was catchy, descriptive, and trademarkable. When it came time to sell the company, we were able to garner value from the brand itself and there was no loss of goodwill transitioning to the new owner when we sold it. If it was called J&J Publishing or some such name, people would still be wondering who are these J&J people and why we were no no longer on the website.
I see a couple disadvantages from corporate brands.
1) Basically every good name and their acronym is taken. I face this issue myself with my business, and had to take a .biz (or .info, .net) extension. I’m still hoping the unused offtheground.com domain will come available, but I fear some squatter will just ask for lots of $ for it.
2) It’s really hard to come up with a good name because, yet again, all the good ones are taken. As a result some people come up with really confusing names that are difficult to remember and to type.
So if you're looking to come up with a non-personal brand name, it better be good. I highly recommend making an investment in such an undertaking by bringing on someone like Eat My Words. You don't want a name that sucks.
Julie Legrand is the founder and president of Off The Ground Consulting. She provides project management, strategic branding and tactical marketing consulting to help start-up companies lay the foundation for a long-term marketing success. |
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Last Updated on Thursday, 15 September 2011 18:31 |
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Written by Julie Legrand
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Thursday, 02 June 2011 00:00 |
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Often I find myself trying to work with existing brands that weren’t really thought through before they started design and as a result we end up making lots of design compromises to accommodate a poorly-designed logo. The first thing a lot of start-ups do is run out and hire someone to design a logo before they’ve had a chance to think about their desired brand identity and marketing plan. The logo design process can’t effectively be done until you’ve got a very clear picture of who you are, why you are in business, and what are your business objectives for your brand.
While some top design agencies might be able to think strategically on your behalf, most designers are focused on making something pretty, and they don’t necessarily think about your business and all the ways your brand / logo is going to be used. This is especially the case if you go out to some el-cheapo off-shore logo company for a $250 logo. Here are some of the big issues I frequently encounter when working with logos that weren’t really thought out:
- Amateur design. Your logo is typically the first impression you give as a business; however, I continue see a lot of people using logos “designed” by a VistaPrint wizard or other inexpensive online service that make them look unprofessional and rinky-dink. If you have unpolished logo and identity materials, how professional will people think your services will be?
- Too many colors. Inexperienced designers don’t get that your logo is going to be used in a variety media, not just online. I’ve encountered logos that have had several colors in them, which increases your production cost at best and at worst, won’t work as in the case of many most promotional products.
- Poor print match. Often what you see on screen or printed out on your ink jet printer looks nothing like how the colors will appear on an off-set printer. I’ve had to scrap a whole set of identity materials that came back from the printer because the colors were much darker than we expected (but what the designer wanted). In order to avoid nasty surprises, always ask your designer to provide you with for PMS / Pantone chips and CMYK equivalent of the color of the logo so you can see how it will look when printed out.
- Doesn’t work with Social Networking sites. How often are you on Facebook or Twitter that you see someone whose logo is cut off? Of course that’s a big no no, but 9 times out of 10, unless I specifically tell a designer to design for Facebook, I’ll end up with a logo that doesn’t fit. There are certainly ways to avoid this. Either tell your design to a) make sure your logo is a perfect square when you design it; or b) create a perfect square version of the logo. Here’s an example of what we did for Edwards Educational Services, with the logo on the right for use in social networking sites.
 
- Missing tagline or other information. One of my clients likes including their logo on everything, but they created their logo before they decided on the tagline. As a result, we’ve encountered a lot of problems fitting the tagline next to the logo on a variety of items from the website to signage. If you’re planning on having a tagline and using it a lot, it’s important to come up with it before you design the logo. Then have the designer make a version with the tagline and one without. Below, you'll see we created a square version of the Off The Ground logo, as well as a verion with the tagline. Note, this was all taken into consideration before the designer even started working.
 
Creating your logo is an important part of creating your brand, and it’s important you do it right so you can avoid these problems. While the top design agencies will probably avoid most of the rookie mistakes, they’re not going to necessarily think about taglines or social networking. However, if you provide detailed guidelines about how you’re planning on using the logo to your designer – be they the top agency or online logo factory (although I’ve yet to see one of these I really like) - you’re most likely to have an attractive logo that supports your brand strategy.
Julie Legrand is the founder and president of Off The Ground Consulting. She provides project management, strategic branding and tactical marketing consulting to help start-up companies lay the foundation for a long-term marketing success. |
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Last Updated on Thursday, 02 June 2011 23:28 |
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Written by Julie Legrand
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Thursday, 23 September 2010 00:00 |
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With a new Make Mine a $Million competition in full force right now, I've been asked by several people what this program has done for me. The short answer is: it changed my life both personally and professionally.
In more detail, I won the award for my previous business, SmartsCo, which I sold last year. Prior to winning the award, we had been struggling with a great concept but we lacked some inspiration to go big. After winning, we got tons of press on the business side of things to (Entrepreneur, Wall Street Journal, etc.) that complimented our successful consumer marketing (InStyle, Food & Wine, NY Times). We were able to grab the attention of the powers that be at Count Me In’s founding sponsor, American Express, and we were selected for a national TV, radio, print, and web ad campaign, which not only was a blast, but also helped us take the business to the next level. We were then able to parlay all the media attention into a new distribution deal (with Chronicle Books), and expand our retail channels exponentially. Other benefits was financial help from American Express and wonderful coaching.
But I think the most amazing part of the program is all the other women who are in the program. We all love to attend the conferences / awards for the chance to connect with each other and encourage each other. We now have a great group in the Bay Area and we have monthly Meet Ups (I hope you can attend) that are open to any women business owners. There are also lots of great webinars hosted by CMI that are great resources.
If you are considering applying, I would be happy to chat further with you about the program and how it can help your business. Whether or not you are an awardee of the M3 program, by taking this first step, you will surely benefit a lot.
To learn more about the program or apply directly visit www.makemineamillion.org. |
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Last Updated on Thursday, 23 September 2010 22:48 |
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Make Yours A Million $ Business |
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Written by Julie Legrand
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Monday, 20 September 2010 00:00 |
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Calling Women Entrepreneurs
Your business is a success—but now it’s time to push it to the next level! Join us for a Make Mine a Million $ Business Application Kick-Off Party to find out how you can win an amazing business-boosting package of coaching, financing, publicity, and marketing.
The Make Mine a Million $ Business Award recognizes women entrepreneurs with the potential to grow their revenues to $1 million and beyond, and gives them the tools to get there. 20 women will be selected as finalists for this award, and 10 will win. Could one of them be you?
The award is presented by Count Me In for Women’s Economic Independence, the leading 501-c3 non-profit provider of business education & resources for women entrepreneurs seeking grow micro businesses into million-dollar operations.
Still in start-up mode? Using the same application process, the Micro to Millions Award helps women boost their businesses up to $250K in revenues. 5 Micro to Millions winners will receive a smaller package of business-building goods, services and resources.
Ready to apply? Bring your questions (and your laptop) to the Bay Area Application Kick-Off Party nearest you.
Berkeley: Thursday, Sept. 23rd, 6-8pm
San Francisco: Thursday, Sept. 30th, 6-8pm
Corte Madera: Monday, Oct. 4th, 6-8pm
Palo Alto: Wednesday, Oct. 6th, 6-8pm
RSVP to rsvp@maderagroup.net to sign up and get more information.
Make Mine a Million $ Business winners and local businesswomen will be on hand to guide you through the step-by-step application process. You’ll discover just how easy it is to complete the application that could boost your business and change your life!
Or, go directly to www.makemineamillion.org to apply. Don’t delay! Take the first step towards reaching your dream today. |
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Last Updated on Monday, 20 September 2010 20:59 |
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