The “build to sell” business strategy is a well-recognized approach where a business is primarily developed for eventual sale. Branding plays a critical role in this strategy, offering numerous benefits, influencing timeframes for building a brand, and impacting pricing differences when selling a branded business versus a white-label one. This strategy underscores the importance of branding in enhancing business value and attractiveness to potential buyers.
Understanding the Build to Sell Strategy and the Role of Branding
The “build to sell” strategy involves creating a business with the aim of selling it once it achieves a certain level of success. This strategy includes identifying a market opportunity, building a business to address that opportunity, and then selling the business to a larger company or investor.
In this context, branding emerges as a crucial factor in enhancing the value and attractiveness of a business. It is a critical component of the “build to sell” strategy, offering several key benefits:
- Brand-Driven Business Value: Effective branding can significantly increase the value of a business. A strong brand builds trust and loyalty among customers, creating recognition and awareness for the business.
- Competitive Edge through Branding: A well-established brand differentiates the business from its competitors, creating a protective moat around the business and making it more valuable.
- brand-Enhanced Sale Price: Elements like brand recognition and intellectual property are unique to your business and can command a higher sale price and a faster sale.
- Emotional Connections through Branding: Brands have the unique ability to forge emotional connections with consumers, which can lead to customer loyalty and the ability to charge premium prices for products or services.
- Trust and Loyalty through Branding: A strong brand builds trust and loyalty among customers, making them more likely to choose your products or services over others.
Timeframes for Build to Sell and Branding
The timeframes for building a business to sell and creating a strong brand can vary based on several factors.
- Build to Sell Timeframe: The timeframe for “build to sell” can vary based on the industry, market conditions, and the specific goals of the business. It may take several years to build a business to a point where it is attractive for sale. A business with a strong staff, well-documented processes, and defined operating procedures will always sell for more and sell faster than a company without these elements.
- Branding Timeframe: Creating a strong brand involves several stages and can take a significant amount of time. The branding process includes six crucial phases: Brand Research, Brand Strategy, Brand Identity, Brand Tools, Brand Launch, and Brand Building. The entire process can take between 2 to 8 months, depending on the complexity and scope of the project. On average, a branding project will take around 6 months, but it can extend to 12 months for complex rebrands.
Pricing Differences: Branded vs. White Label
Selling a business with a strong brand can command higher prices compared to white-label products. Here are the key points:
- Higher Sale Price for Branded Businesses: A strong brand can command higher prices because it creates differentiation, trust, and emotional connections with consumers. Buyers are willing to pay more for a business with a well-established brand because it offers a competitive advantage and a higher perceived value.
- White Label Products: White label products are generally priced cheaper than their branded alternatives. They are generic and mass-produced, leading to cost savings for consumers. As a result, businesses that rely on white-label products may not command as high a sale price as those with strong branding.
The “build to sell” strategy is a legitimate and potentially profitable business approach, provided that legal regulations are carefully followed. The profitability of this strategy can be substantial, though it requires significant expertise and risk management. Branding plays a pivotal role in enhancing the value and attractiveness of a business, making it a critical component of the “build to sell” strategy. By creating a strong, recognizable brand, businesses can build trust, loyalty, and emotional connections with customers, ultimately increasing their market value and success potential.
Source: Entrepreneur Media, LLC, Investopedia, Harvard Business Publishing Education, Anita Kinoshita, Amanda Breen, Sherin Shibu, Nicholas Leighton, Dave Spooner, Ben Angel, Dan Bova, Shawn P. Walchef, Jason Feifer, Mario Armstrong, Frances Dodds, Kim Kavin, and Yurle Villegas, all recognized professionals and experts in their respective fields.
