Racing retailers that are in business for the long haul have more to gain from taking care of business than just the margin made on the brand named racing products they sell. In addition to growing your clientele at some point you may want to expand your operation, open more locations or sell the business and move on.
It’s common for small retail businesses to start up without much thought given to the importance of registering, marketing and protecting their business name, eventually many go on to develop or market private label products under their company name with considerable investment.
Your business identity is your brand, and you need to protect and promote it like the valuable brands you represent and sell. Your brand is “IP” (intellectual property) and it has value like any other business asset. Take stock in your business name and logo, not only do these properties help customers remember you, but they can also instill pride and confidence in their relationship with your business. Perhaps most important of all, a properly registered brand identity is the key to transferring “goodwill”.
Goodwill = Brand Equity
The longstanding vendor relationships, loyal client following and reputation that continues to help generate new customers and sales for your business, is what is known legally as “goodwill”. Goodwill sounds like a simple concept, but it can quickly become complex if you find yourself considering selling your business, licensing or franchising stores or fighting off a competitor that is using a confusingly similar business identity.
Example: Let’s say you built your company up over the past 10 years and in the last three years you have had gross annual sales of around $3 million with average net profits around 10%. And now you find yourself with a serious potential buyer, but it is discovered through the due-diligence (research) process that your business name is not properly registered, and therefore the identity that customers have come to know, trust, recommend and associate with the brands you sell cannot be sold along with your business operation and assets. This means that the proverbial shingle you have hung and the path you have blazed to establish your book of business cannot be legally transferred as a securable asset, reducing your business value down to what the real property assets and inventories are worth and not much more; whereas under proper circumstances you could’ve sold for around one to two times the amount of your annual sales.
How do you register and protect your brand?
If you’re reading this chances are you’re already engaged in your own retail business and have been investing in your brand’s identity for a while.
The English language only has so many combinations of words, letters and numbers so over time entrepreneurs have registered trademarks comprised of family names, initials, acronyms, popular words or cool sounding combinations to call their businesses, and some have gone on to become hugely successful brands and commercial icons.
With the advancements in ecommerce and global shipping few businesses focus solely on local markets anymore, which means more potential for running into someone else out there using a confusingly close, if not the same name as you. Whether or not your company name is registered, or if you’re looking to start a new brand or business here are some essential things to consider:
1. Acquiring a business license and tax ID at the city, county, state and federal levels does not provide you with any intellectual property rights for your business name. Though within the jurisdiction of these agencies they prevent conflicts with existing registered business names.
2. Names can be registered for trademark protection under state, federal and international law; and registrations can be sought for specific categories, with specific designated use, even though the name may already be registered in another non-conflicting category.
3. The United States Patent & Trademark Office (USPTO) establishes and governs much of the protocol and requirements for registration, compliance and enforcement around the world, with reciprocal arrangements with most countries and unions.
4. Trademark registration can be done without the assistance of an attorney, but the process can be complex and in most cases better left to seasoned professionals; and the costs of basic registration and additional categories is fairly inexpensive.
5. Trademarks can be made from a word or words, abstract shapes or a combination of words, shapes and colors. They can only contain common or generic terms e.g. “racing”, under grant of exception, which excludes the applicant from the right to claim the generic word itself, apart from the combination of words granted for registration.
6. A Trademark registration for the same word or words can be granted to different parties in a number of officially recognized categories. The basic legal rule applied to grant or disallow registration comprised of similar words, is based on whether or not the registration would “likely cause confusion among the public”.
7. By registering your brand name under trademark protection you establish and gain a legally recognized and sellable Intellectual property asset.
8. Once registered, it is the responsibility of the Trademark’s owner to discover, combat and bring suit for infringements against their intellectual property.
Cross-promote your brand with the brands you sell:
Many of the brands you sell have become popular because of their reputations, which are based on the quality, performance, reliability and the marketing of those attributes. Presenting your brand name alongside these popular brands every chance you get will help strengthen your brand image through association. This is called cross-promotion, and it has reciprocal value to your vendor too, if you are effectively advertising and working hard to build equity in your own identity and reputation. The better your reputation, the better your customers will feel about the brands you represent. Many vendors offer cross-promotion incentives in the form of matching funds or product discounts that can be applied toward advertising or promotional activities. Cross-promotion should be an integral and calculated part of your marketing program; you may be surprised at the ROI and savings that can come from well executed cross-promotion. The best way to take advantage of cross-promotion opportunities is to ask your vendors what they offer and create a plan that puts it to good use.
Your brand identity is how people find you, remember you and ultimately recommend you. Of course there is a lot that goes into making customers want to do business with you, but ultimately it is your business identity that represents the experience that you create for your customer.
Take the steps to ensure new customers find you and come back to you. There is more to attracting buyers then having the most inventory and the best prices. Register and protect your brand identity, because you may want to sell your business someday and your brand helps wrap what you’ve built into a sellable asset.
Performance Branding Team: Paet Hidalgo is the Managing Director and chief marketing strategist for Performance Branding (www.performance-branding.com), also known as the Haro Design Group, founded by Bob Haro. Haro manages the agency’s creative design.
Bob Haro and Paet Hidalgo.
About Performance Branding: For over a decade Performance Branding has been helping motor sports, action sports and aftermarket businesses connect and communicate with their target customers to increase sales, customer retention and profitability. The company has helped companies including Toyota, RCR, Red Bull, Nike, Cobra and Axio win customers by helping their retailers implement programs that work. Performance Branding teach retailers how to use the brands they sell to attract buyers and to keep them coming back. It also helps them understand how to put co-op, social media and other confusing tools and incentive programs to work for them, to better leverage the marketing efforts of the brands they sell. “If your business sells products and relies on reoccurring sales, then you have a “brand” of your own, which is your business identity and the key to consumers finding you, buying from you and coming back to you,” said Haro.