What is brand equity and what does it mean for small businesses?

Learn what brand equity is and specifically what it means for small businesses.Maybe you’ve come across the term “brand equity” and wasn’t sure what exactly it meant, and whether it was something you should concern yourself over. If so, let me try to clarify the meaning behind the term!

Brand equity can be defined as the positive or negative impact that comes as a result of the perception that people have of your business (your brand). That description is a little dry, so let me break it down a little more.

First things first. What is a brand?

To start with, you want a good understanding about what a brand is. You can check out my post that answers the question of what brands and branding is right here!

If you just want the abridged version — a brand is the impression people have of a business. What kind of feelings does your business evoke when your customers or clients come into contact with it? “Branding”, (the verb), is the action of building this brand. Actively branding your business comes in the form of defining core values, developing a personality for your business, marketing, as well as creating a visual identity (logo, colours, packaging etc).

Related post: 5 essential elements your visual brand identity needs

The impact of a brand on business worth

So you know what your brand is now, right? It’s the overall perception that people have of your business. So what you can realise from that is that this perception could be good or negative.

A good perception can mean higher sales. It can mean more people talking about your business and recommending it to others. It can mean customer loyalty and earning people’s dedication to your brand. You can see how a good perception of your business is, well, good for business. A well-performing brand adds value to your business.

Of course, the opposite is also true. Getting some bad press, or being associated with something unfavourable, is going to have a negative impact on your business. People might actively avoid using your business, and turn to others instead.

So, what is brand equity?

Basically, brand equity is the value of your brand. Positive brand perception adds value to your business — this is good brand equity. Conversely, a negative perception takes value away. Brand equity determines whether your products and services are worth more or less than their simple market value.

Brand equity is how Coca-Cola is about to charge more for their product, versus other generic brands. It isn’t that their cola is necessarily better. They’re able to charge higher prices because of the strength of their brand. Similarly, the power of Starbucks’ brand is how they’re able to get their customers to essentially provide free marketing with pretty Instagram photos of their coffees.

Measuring your brand equity

Everything you do as a business is going to have an effect on your brand. This is why, if you currently have good brand equity, it would be important for you to maintain strong consistency, and to “stay on brand” when trying new things. (Take a look at my post on checking the consistency of your brand.)

Some things that you can look at to measure your business’s brand equity include:

  • the loyalty of your customers — do you have repeat-buyers? Are your customers likely to choose your brand over others time and time again?
  • familiarity — how well do people know your brand and what it represents? This is linked to your brand’s visibility. How active your marketing campaigns are, and how engaged you are with your target audience.
  • the perception of quality — not necessarily the actual quality of your products/services (although that would certainly play an important part), but how your customers feel about the standard of quality they’re receiving from your business. You want your customers to feel that the level of quality they’re receiving is at least as good as what you’re actually delivering. If they think something looks/feels cheaper than it really is, that’s going to have a negative impact!

Brand equity for small businesses

Now, as a small business owner, you don’t exactly own something on par with Coke or Starbucks. But that doesn’t mean brand equity isn’t also important for you. Big companies know the power of building a positive brand and the benefits that come from doing so — and so should you!

So you might be thinking, “Yeah okay, but there’s no way I can compete with the big brands. I don’t have the budget to reach millions. I can’t create global awareness of my brand. Instand recognisability with the general population just isn’t something I can expect to ever reach.”

This may all be true — and that’s how brand equity is different for small businesses, compared to big ones. It’s less about mass markets and more about intimate connections. The brand equity for a small business doesn’t come from having an enormous reach; it’s determined by the strength of the reach you have.

What it comes down to: Knowing your audience

You don’t need your brand to be a household name to have great brand equity. Instead, what you want to focus on is how powerful your message is for your niche. It’s all in the relationships you build with your ideal customers.
Some ways to help you establish amazing brand equity include things like:

  • delivering high-quality content
  • building email lists with engaged customers
  • having a consistent brand identity that your audience recognises
  • having a one-to-one approach to customer service

Related post: Why you need to define your ideal client

Does your brand have a positive or negative effect on your business? Learn more about brand equity by reading this post!Last thoughts

The way you approach the idea of brand equity as a small business differs from how it might be seen from the perspective of big, global companies. But in either case, it’s an important thing to take note of. By taking active control of your branding and the impact it has on your business, you can make sure you’re standing out and staying ahead of your competition (which is something we all have, no matter how big or small our business is).

Are you taking the value of your brand seriously enough? Learn about working with me if you’d like to take things further!

2 thoughts on “What is brand equity and what does it mean for small businesses?”

  1. Insightful read! This article brilliantly delves into the concept of brand equity and its crucial significance for small businesses. The practical examples provided really drive home the importance of cultivating a strong brand identity. Thanks for shedding light on this essential aspect of business success.


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