Corporate logos are intended to be the "face" of a company: They are graphical displays of a company's unique identity, and through colors and fonts and images they provide essential information about a company that allows customers to identify with the company's core brand. Logos are also a shorthand way of referring to the company in advertising and marketing materials; they also provide an anchor point for the various fonts, colors and design choices in all other business marketing materials.
Good logos should be unique and comprehensible to potential customers. Although there are myriad choices for color, visual elements and typography, in general a logo should help convey some information about the company, or be designed in a way that gives some sense of meaning about the company or its industry. For example, cutting-edge firms and tech companies tend to have angular logos to convey speed, while service-oriented firms have rounded logos to provide a sense of service and trust.
Logos are the chief visual component of a company's overall brand identity. The logo appears on stationery, websites, business cards and advertising. For that reason, a well-designed logo can contribute to business success, while a substandard logo can imply amateurishness and turn off potential customers. However, a logo should cohere well with other aspects of a company's visual presentation: No logo, however well designed, can look good when surrounded by contradictory graphical elements or inconsistent fonts. This is why a logo is the basic unit of a larger brand identity that includes company fonts, colors and document-design guidelines.
Return on Investment
As consumers grow to know, like and trust a specific brand, they are more likely to respond positively to successive encounters with a logo--potentially leading to increased sales or improved mind share within the target market. In addition, a well-designed logo implies a degree of professionalism and competence that could help steer potential new clients toward selecting the business rather than a competitor with no or substandard logos.
Small businesses often play it fast-and-loose with logos, paying insufficient attention to their proper size and positioning and surrounding them with materials--including clipart--that compete with them visually. Avoid re-creating different types of logos for specific purposes (e.g., letterhead and business cards) or having similar-but-not-identical versions for print and online purposes.