AUTHOR: Alex McCready
Vardags is a leading UK law firm offering world-class expertise in corporate and commercial legal issues. We recognise that companies require more than just legal advice – when it comes to scaling up, they benefit from a unique and dynamic multi-disciplinary offering which provides powerful support in all areas of their business. The Vardags multi-disciplinary offering not only includes the full ambit of private corporate work but combines the unrivalled expertise of our Reputation and Privacy and Commercial and Civil litigation teams, ensuring 360° outstanding strategic solutions for your business.
Establishing a good ‘reputation’ is something all entrepreneurs need to consider and carries its own, immense value for companies – both small and large, established and new. Reputation, in the context of business, is better known as ‘brand identity’, or rather, ‘corporate identity’. As Jeff Bezos explained - ‘a brand for a company is like a reputation for a person’
You will need to consider what particular brand you want to establish – is your company a challenger seeking to shake up an existing sector? Are you a tech innovator with a new product to offer? Are you building on an established reputation in order to launch a new venture or product?
Brand identity comprises three things1:
How people perceive your company
The values that your company upholds, and
What your company communicates about itself.
The first of these three – perception – cannot be controlled, but it can be heavily influenced by your company’s actions and engagement, as well as those of your partners and employees. This is, perhaps, what makes reputation so valuable and ephemeral: it must be earnt, and once earnt, sustained.
Building a brand that your customers are loyal to is crucial for many reasons – the key being that you gain a returning purchaser of your product and/or service(s), and someone who will willingly recommend your company if asked. This in turn, gives you a competitive advantage within the market in which you operate. It’s simple: the better and more recognisable your brand is, the more loyal customers will return to your company to address their needs, and the more likely they are to recommend you to others. This advantage can then be harnessed to grow your business or to charge a premium on your product/service(s), which loyal customers are more likely to rationalise paying. And, with that, profitability increases.
Just as crucially - a company that is highly regarded is also more able to attract and retain talent, so that you can build a bigger and better workforce. This is something that is particularly vital for new ventures which are high-growth and require the resource.
A good reputation is particularly crucial for businesses at the beginning of their journey, and in order to achieve growth. Namely, it gives these ventures a much greater chance of long-term success and viability, which is especially important when considering that roughly half of all businesses fail within the first 5 years. It is also crucial if your business is seeking investment from third parties in order to grow.
Your company’s initial reputation can also benefit a company, more immediately, in terms of its resources and relationships. Reputation feeds into all aspects of a business, not just the customer interface: a great corporate identity can also positively influence the relationships you have with the individuals/companies in your supply chain, possibly entailing new opportunities, introductions, discounts, deals and continuing loyalty.
But a reputation needs strong foundations. And, to have these, you need to ensure things like setting up proper processes for keeping confidential and trade sensitive information safe and having robust contracts of employment with any employees.
It is also crucial for those in senior roles (of a company of any size, and age) to protect and uphold their reputation which is linked but separate to their company’s brand. This is especially true for founders of companies whose image is or will become so central to the overall ‘brand’ – think of Richard Branson: the founder but also ‘the face’ of Virgin Group – and whose reputation (both public and private) can vastly influence the company’s overall reputation and profitability. As such, the reputation of founders, directors and managers is an equally valuable corporate asset, and where ill-perceived (internally and/or externally), can pose a strategic threat to the business.
Ask yourself, ultimately, what you want your reputation to be – your own, and your businesses. This will help set the parameters for your entire reputation strategy.
The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.