When you build a brand, you're building a person. Your brand identity is therefore how your business presents itself to, and wants to be perceived by, it's consumers.
But your brand identity shouldn't be confused with your brand "image" - which is the result of these efforts, be they successful or not. An identity is the true personality of your brand, not the end result.
In order to create a solid brand identity, you first have to understand who your customers are, and then you can start to understand who your brand should be. Once you have done this you can amplify the personality of the brand and make sure it runs through every aspect of what it does.
All brand decisions that follow should be a doddle and your new baby can mature into a fully fledged, grown-up brand.