When you’re a small business owner there isn’t much room in the budget to work with. While most day-to-day business activities require conservative spending, efforts that have the potential to bring in money, like small business marketing, get overlooked as an unnecessary luxury. However, strategically executed marketing campaigns have an impact on revenue, especially in small businesses. And in most cases, startups overlook alternative routes for creating the marketing budget, like fundraising.
To help you fund your small business marketing campaigns here are 7 tips worth looking into.
Calculate a budget estimate
Before you even consider funding options, determine how much money you need to invest. According to statistics, some companies spend as much as 49% of their gross revenue on business marketing. While this may seem over the top, the average budget allocated for marketing still remains a high 12%.
In order to fund your campaigns, you will need to calculate the amount you wish to spend on them. Figure out how much you need to spend on each marketing channel and then combine the numbers.
This gives you an estimate of how much money you will actually need to acquire in order to fund your marketing efforts.
Ask family and friends for help
Unlike other funding models, asking family and friends for a loan means you won’t have to pay any interest rates. According to Joe Griffin, CEO of Clear Voice, it is one of the first ways to raise capital as a small business owner.
However, money and people close to you isn’t the best combination. To ensure that you don’t fall out with them, handle this transaction as a professional. Consider giving returnable shares of the company as a safety net until you can pay them back the loan.
Start a crowdfunding campaign
Crowdfunding is a way of raising capital through the collection of small-dollar contributions from individual investors. This will require you to write an effective crowdfunding pitch and use a crowdfunding platform, like Kickstarter or Indiegogo, to get access to those potential small investors.
Depending on the amount of your final cash goal, it could be a slow process. In order to boost the speed of your campaign, you will need to promote your crowdfunding venture and dedicate enough time to each individual investor for the validation of your concept.
Still, this type of fundraising is a marketing campaign in itself, since all your investors are future customers. All you have to do is be patient.
Take out a loan
When raising capital to fund your marketing campaigns, taking out a loan is one of the fastest ways to acquire enough funding for long-term promotional efforts. Although you will need to pay a steep monthly interest rate, it will be spread over an extended period.
For example, interest for stable personal loans in Australia is calculated based on your credit history and can be as low as 7.5% for a period of 2-5 years. To ensure you make good on your payment each month, including the return fee as an overhead cost. This significantly reduces the risk of being late.
As you start receiving returns on your marketing investments. You will be able to increase your loan fee and decrease the return payment of your loan. Once you do, you will be able to use those returns to fund other efforts or take out another loan for a larger investment thanks to your good credit score.
Presell your products
In case your business is product-oriented, a great way to acquire funding is to pre-sell your products before the official launch.
However, this requires you to invest some of your existing funds into creating an effective marketing campaign on a tight budget. Don`t make it just about selling products but strengthen your brand by using psychological processes customers go through for your own ends. Tell a story and get to the heart of your prospects by making them aware of who you are and what you are doing. This way you will easier convince them of potential benefits of buying your product weeks or even months in advance.
To do this successfully, create buyer incentives like discounts and special offers, and emphasize these benefits publicly. Make your presentation highly visual and memorable with a help of branding professionals like this creative agency from Sydney. These actions combined will motivate people to be the first in line for your product. And inject much-needed cash into the marketing budget for future promotion.
Go after grants
Government, investment or startup grants might be available to you. Grants are a reasonable method of funding your marketing campaign, especially for small businesses.
This type of funding is usually long-term and is divided into several stages. After completing particular milestones, you receive the next round of funding.
The best way to find a grant suited to your cause is by simply going online and doing research in your area of business. Additionally, you should find and apply to several grants to maximize the success rate of your effort.
Remember that whatever form of funding you choose to pursue. At one point in the future, you will start seeing the returns on your investment. And as your revenue starts to move upwards, you will start paying off your loans. Also, open up space in the budget to finance new campaigns.
Eventually, you will rely solely on profit to finance your marketing efforts. Fundraising, on the other hand, will be reserved for long-term investments that will make your small business expand and grow.