Why communications is even more critical for early-stage companies

Unless you are backed by a celebrity, or a well-known entrepreneur with a killer track record and buckets of cash, one of the challenges typically faced by start-ups is a lack of positive profile and reputation. As self-serving as that statement sounds coming from someone in communications, it is truer for early-stage companies than anyone else almost by definition. However, in the start-up world of wafer-thin budgets and lack of resource, committing time, energy and cash (all of which tend to be in short supply) to something as seemingly nebulous as ‘reputation building’ can quickly fall to the back of the queue.

At this point it is probably worth defining “reputation” as the thing that generates collective judgements amongst your stakeholders (e.g. investors, customers or employees) about what a company is, what it does, what it stands for and the value of its products or services, over time. Unfortunately, it doesn’t matter how good or innovative your product or service is, a lack of “reputation” can be a major hurdle to get over when it comes to selling your product or locking in that early-stage funding. Conversely a positive reputation can make it significantly easier for you to attract investors and talent, increase sales and revenues, and ensure that people want to do business with you.

There have been numerous studies over the last decade that have shown that high-performing start-ups and SME’s implement comprehensive communications strategies at an earlier stage and to a greater extent than low-performing ones. Additionally, communications-oriented start-ups and SMEs are able to achieve a distinct performance advantage by effectively communicating their identity to its stakeholders. Yet, relative to its cost and importance for success, it is something that early-stage companies typically spend the least amount of time and effort cultivating (pls note I am not talking about consumer or retail brand startups which tend to be entirely focused on brand positioning).

In our experience, in start-ups there are often no established operating routines or dedicated roles for communications and, as a result, often limited ‘know-how’. Typically, communications activity is ad hoc and driven by founders, who are extremely time poor and have little or no professional background in communications. Without the ad spending power of large companies, start-up firms depend much more on stakeholder engagement in order to build up that much needed reputation and legitimacy. Consequently, it is crucial for start-ups’ to find other ways to raise awareness and build up relationships with their stakeholders.

Effective communications is strategic

Experience and studies have both shown that communications and PR is most effective when it is integrated into the long-term business planning from the earliest possible stage. So even if you plan on executing the communications activity in-house (i.e. not hiring a firm), thinking about how and when you will communicate as part of the wider business plan is key. Moreover, it needs to be ‘strategic’, meaning that it should be centred around achieving or supporting specific long term business objectives and reputational outcomes, not for its own sake or short-term gain as is so often the case.

Start-up communications needs to be two-way

Many start-ups tend to focus on what academics and ‘we in the biz’ call an “informative communication model”. This is essentially where companies push out corporate information to their publics or stakeholders, and whilst this can be effective, it has its limitations. Purely informative communications has shown to be less effective in terms of long term strategic outcomes than more conversational communications models aimed at building mutual and deep understanding with stakeholders. Early-stage companies need to create effective feedback mechanisms that allow stakeholders to make their issues known and be seen to react or address those issues creating trust and ultimately a positive reputation.

Consistency and long-term thinking is paramount

Building a positive reputation requires patience and long-term thinking. Most communications strategies for early-stage companies at their core should involve generating awareness and then converting that awareness into deep understanding, which cannot happen overnight, but will pay dividends in the long run.