SME BRANDING: The Hype, the Buzz and the Reality

Branding, branding and branding.

Ask almost anyone these days and they will be able to give you their own definition on what the word means to them.

While all the answers are correct (giving the benefit of the doubt) most of them seem to have the imagination that because branding is an expensive exercise, they are expecting to increase their business volume or revenue almost immediately.

The ever changing marketing tools and trends has put considerable pressure on companies especially SME’s to adept to almost any latest marketing strategies for fear of being left behind.

In these series of blogs, we will attempt to give fresh perception on what branding is actually about and how SME’s can benefit from the right branding exercise.

Branding as defined by Webster’s New Millennium Dictionary is the sum total of a company's value, including products, services, people, advertising, positioning, and culture.

This general definition gives room for 1001 branding activities which is mostly shaped by the increasing tools or new media available in the Malaysian market, which could range from the smallest pamphlet to the biggest billboards and the latest internet marketing tools such as a blog.

With all the world has to offer you, how do you choose the right medium to deliver your message? Fact remains that branding should be first a planned communication effort to increase awareness and credibility of a company, product or services.

That being said, SME owners’ first need to fully understand the standard S.W.O.T (Strengths, Weaknesses, Opportunities, and Threats) analysis of their product or services and then decide on the communication path.

Yeah…yeah…bla…bla…bla. Tell us something we don’t already know. Even with all these information and knowledge, most Malaysian SME business owner still chooses their efforts poorly because their general concerns over ROI (Return on Investment) and whether it would actually reflect where it matters.

As I said earlier that branding is firstly a planned communication effort. Thus proper and effective planning takes time.

Furthermore, you cannot expect an action or decision you take in order to increase the value, market presence and market share in the long run to show results only after a few months.

There is a definite need for SME’s to change their mindset and acceptance to total branding effort which in turn will generate greater profits in the long run.

Next up in THE BUZZ we will identify the 2 major branding arms and help you figure ($$) out which would suit your long term goals and budget.
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*Contributions from Anchor Media Sdn Bhd

Tips for SMEs

A friend told me recently that to become a successful SME player you need to take note on a number of things. I think he knows best because he has seen the Ups and Downs of the business and also the Good and the Bad. Although he didn't want his name to be mentioned in the blog, he did let out some tips that could be useful. Check it out below.

1. Avoid 50:50 partnerships. One partner must take the lead.
2. Seize each opportunity when it presents itself, otherwise someone else will.
3. Never start a business with inadequate investment. Lack of capital scuppers the best ideas.
4. Work closely with a business mentor. Good advice can cost, but it can also save you a great deal of heartache.
5. Never take anything for granted and always have a "get-out-of-jail" card.
6. Never give up. This is so important as people give up too easily and you never get where you want to be without sacrifice.
7. Believe in yourself and your people. Encourage them to have ideas and develop themselves. In turn, your organisation develops.
8. Always work with integrity and honesty.
9. Keep talking to the bank and creditors, however tough things get. Keep close to the finances and be prepared to discuss problems as they arise. Even bad news is better received if you can accompany it with a plan for putting things right.
10. Be selective when seeking contracts. Know your customer and market and make sure you understand the impact on cashflow as well as profit.

The Good and The Bad

I have a lot of admiration for entrepreneurs. It can be tough and stressful road creating a business that will grow, stay competitive and last.

I feel small entrepreneurial businesses are one of the most exciting sectors. Fresh and innovative ideas are often brought to life in a free spirited and flexible environment.

If you look at the table at the side you will see typical key areas listed that are associated with an entrepreneurial business, but are they all good and are some downright bad?

The answer to the above is actually quite simple. The truth is that it depends where the business is in its life.
For new small entrepreneurial businesses the above list is common, but as the company grows it needs to develop and change.

For example, with 3 employees the list is just fine. Multiple the employees by a hundred to 300 and with the list melt down will result unless there is swift change in key areas.

Here is the rub of course. As the business grows it needs to develop and change, but making change is a painful process and gets avoided. However, you just cannot avoid change if you want your business to grow and there are methods to make it less painful.

What is an SME

If you ask different people on a same question you might get different answers. Same goes with the definition of a small and medium-sized enterprise or SME.

Ask the European Commission and you will get a definition based on number of employees, annual turnover, annual balance sheet total and level of autonomy.

Ask the UK Government's Small Business Service and it defines a small business as a business with fewer than 50 employees and a medium size businesses as those with 50 to 249 employees.

In the US, the United States Small Business Administration takes into account industry type and recognises a firm of a given size could be small in relation to one sector, but large in another. For example, a small manufacturing business is one with less than 500 employees and a small wholesale trade business is one with less than 100 employees.

However, to me, there is no clean cut definition of SMEs.
Overall, a SME tends to be an independent, managed by its owner or part-owners and has a small market share.

Businesses may be a sole proprietorship, partnership, corporation, or any other legal form. The majority of these type of businesses are not incorporated companies, but are owned and managed by self-employed people either on their own or in partnership.

In Malaysia, the definition of SME is based on two criterias, namely the number of people the business is employing, or revenue it makes.

In short, a business can be called an SME if it meets either one of the two criterias. Within the SME itself, there are also terms that are used to describe if an SME is a Micro Enterprise, Small Enterprise or Medium Enterprise, and again this depends on the criterias.

The unclear definition posed confusion especially when an entrepreneur is looking to get assistance from the SME related bodies and financial institutions.

However in 2005, the National SME Development Council announced the official and standardised definition of SME. The definition is used across various sectors, and adopted by the government ministries, agencies and financial institutions which are involved in the development program of the SMEs.

Productivity Performance Of Small and Medium Industries

Highlights

• SMIs accounted for 96.5% of total manufacturing establishments.
• The largest contributors to SMIs total output were Food Products & Beverages (32.3%), Chemical & Chemical Products (16.5%), Rubber & Plastics Products (10.2%) and Furniture (4.1%).
• The productivity of SMIs grew by 5.3% to RM46,568 in 2007.
• Industries registering higher productivity growth than SMIs average were Chemical & Chemical Products, Petroleum Products, Office Accounting & Computing, Machinery, Wood & Wood Products, Basic Metals, and Radio, Television & Communication Equipment.
• Labour Cost Competitiveness of SMIs was enhanced with a 2.7% reduction in Unit Labour Cost.
• Productivity of SMIs is expected to strengthen by more than 6.0% in 2008.