Every business owner realizes the importance of marketing. However, many businesses, especially new ones, lack the necessary funds to invest in promotions. A cash-strapped organization will often rely on word-of-mouth referrals from family and friends. Word of mouth is indeed very effective, but it is inadequate for scaling up. After all, you can only scale up that much through a limited number of family members and friends.
Also, it takes effort and time to build relationships with potential customers, which most new companies cannot afford. They need to scale up quickly, and for this, they need to promote their products/services through advertising and marketing.
Why Investment in Marketing is Important
Marketing will help spread the word about the company and its products and services. Done correctly, it can reach far, much beyond its geographical area and beyond the circle of known people. With effective marketing, the business can make sales to random people. Businesses that invest in marketing can typically see 3 to 4 times higher revenue growth compared to those that don’t prioritize this.
Here are some top reasons to invest in marketing –
- High ROI – An effective marketing campaign will produce a measurable return, which should more than cover the expense. Businesses can optimize the marketing budget by measuring the ROIL and allocating the funds accordingly.
- Brand awareness – Engaging and consistent promotions make the brand recognizable. When potential buyers see a brand repeatedly, they start to trust it, which makes it more likely for them to turn into paying customers.
- Trust and credibility – Marketing will help the organization create brand equity by showing its value and expertise. By sharing customer success stories and high-value content, it can strengthen the reputation.
- Brand distinction – A business must communicate its unique value proposition because the market is crowded, and it must clearly state what makes it special. This will help the brand stand out. Customers who resonate with its unique identity will be attracted.
- Data-driven decisions – Customer engagement and performance can be tracked by leveraging analytics. The data will provide key insights, which will allow the business to understand the preferences of customers and develop future products/services accordingly.
What is Marketing Funding?
Marketing funding refers to the capital needed to finance marketing endeavors. Ideally, this investment should return more than what the business had invested in promotions. The capital for marketing can be invested in different initiatives, like –
- Social media marketing
- Direct mail
- Television and billboards
- Email newsletters
- SEO & PPC campaigns
- In-person events like seminars and conferences
Where Can I Get the Finance for Marketing?
Fortunately, there are many ways to raise the money to finance your marketing initiatives.
- Self-funding – First, create an estimate of how much you need to spend on marketing. Perhaps you can fund this yourself if the required amount is manageable. You can take the money from your retirement funds or personal savings account. You may also ask for a donation from family or friends.
Of course, with self-funding, there is always the risk of losing personal savings if it doesn’t work out. On the positive side, you will retain full ownership of the business.
- A small loan – Small business owners and self-proprietors can also take a personal loan or a small business loan. You can consider an online cash advance lender or an offline banker who can give you the required funding.
Before applying, make sure to prepare your business plan, expense report, value proposition, and financial projections. Prepare a report detailing why you need the money, how you want to spend it, and the likely revenue earning. Consider the interest rates offered before deciding. Go through the terms and conditions carefully.
- Crowdfunding – If the business has the potential to generate a fan base, then you can also consider crowdfunding. There are many crowdfunding platforms like Patreon, Indiegogo, and Kickstarter where you can present your products and ask for financial backing. You can get funding in exchange for a free product if it generates interest. You can also offer a discount code.
Crowdfunding is a good option for startup businesses. With crowdfunding, you will retain complete ownership of the company while raising the needed money.
- Invoice funding – Also known as invoice factoring, this is a kind of business finance where the factoring company will pay for the unpaid invoices of your business. This means you will get paid before the due date. The factoring company will follow up with your customers to realize the payment as per the payment terms of your invoices.
Invoice funding is a smart move because you will always have the money you need. Quick payment will let you use the money to acquire new customers. Finance those invoices as well to keep growing.
- Venture capital – An angel investor or venture capitalist (VC) can also give you the much-needed capital for growth. Typically, a business starts on its own and then approaches a VC for the funding needed to scale up. Plus, the business can also receive mentorship to improve brand visibility and accelerate growth.
VC money is one of the most prestigious forms of financing available. However, remember, the venture capitalist is likely to take up a percentage stake of your business in exchange for the money offered.
- Business credit card – This is a revolving line of credit that can be used immediately for your marketing expenses. The interest rate, though, can be high. Always check the repayment terms.
It is true – “You need money to make money”. Luckily, there are many ways to raise the money for marketing. Weigh the risks and rewards of each option before deciding. Consider your costs and the amount you need to reach the market and your customers. Remember, no two businesses are the same.
