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Financial considerations of rebranding your company.

Branding is a lot more than just a cool logo or tagline – it should embody the company’s identity, core values and reputation.

Your branding is what is going to make people remember you. Think about it as soon as you see the golden arches you know immediately it’s McDonalds or someone tells you they’re going to “The happiest place on Earth”, you know they are referring to Disneyland.

Companies aren’t shy of rebranding – even the big brands like Burger King, Starbucks, Pepsi and Co-Op have successfully rebranded over the years.

With the way markets evolve and customer preferences change, sometimes it’s necessary to give your company a little revamp – but you don’t want it to break the bank.

So, let’s take a look at some of the financial considerations of rebranding your business.

Cost analysis

One of the first things you’ll want to do is assess costs to see if you will be able to make room for the rebrand in your budget.

Assuming you are turning to an outsourced company to manage your rebrand, you’ll need to look at costs like hiring graphic designers and web developers. Other expenses will include:

  • Legal fees for trademarking your new brand
  • Updating physical and digital signage
  • Marketing expenses including online campaigns, PR and print advertisement
  • Inventory costs – you’ll need to replace old branded items with new ones.

Rebranding can be an expensive process, but if you are financially stable enough to go through with it, it could be a huge step in enhancing your business’s success.

How will it impact cash flow?

Rebranding can have a big impact on your cash flow, with both positive and negative effects.

On the one hand, the initial costs of rebranding can be quite high with your investment in new designs, marketing campaigns, and possibly new product packaging.

These upfront expenses might squeeze your wallet a bit, which is why doing a financial check-up first is crucial to avoid diving into debt.

However, if the rebrand is successful, it can lead to a significant boost in sales and revenue over time. Your brand could attract new customers and re-engage existing ones, ultimately increasing your market share.

Managing your cash flow could be the make or break of your company during a rebrand. So be sure to map out your expected expenses and incoming revenue during the rebranding phase to avoid any unwanted financial surprises.

Cash reserves could be a useful resource you can utilise to ensure you can handle these extra expenses without putting your day-to-day operations in jeopardy.

Return on Investment (ROI)

Typically, you rebrand as a response to a problem, but before you commit to it you will need to analyse the potential ROI.

You should conduct thorough market research to understand if the rebrand will resonate with your target audience and encourage increased sales.

Reach out to your customers through either face-to-face conversations or through surveys to find out what they think of your current branding and see how they respond to your potential alterations.

Depending on what industry you work in, there might be companies similar to yours that have also gone through a rebrand. Looking at how their customers reacted to their rebrand could give you the insights you need to know that the market is ready and open to change.

Forecast sales increases for your business as a result of the revamp. For example, if you’re a clothing store and a similar brand rebranded and saw a 30 per cent increase in their sales, use this data to forecast your own potential growth.

Tax implications

When you’re thinking about rebranding, you will need to consider any tax implications, for instance, you may be able to deduct some of the rebranding costs as a business expense.

Understanding the tax treatment of capital expenditure in relation to rebranding will also be important.

Things like signage or an updated website are not usually immediately deductible, instead, these costs are capitalised and depreciated over the years.

To understand the tax implications of rebranding, you should consult an accountant or tax advisor to optimise your tax during the rebranding phase.

By providing financial analysis and advice, we can help you identify opportunities for growth and expansion, while also managing the associated risks.

With the right financial strategy in place, you can expand your business in a way that reinforces your brand values and image.

If you would like advice on your financial strategy for rebranding your business, please get in touch with one of our expert accountants.

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