The Small Business Administration suggests small businesses with revenues under $5 million allocate up to 8 percent of those revenues toward marketing. That figure could be split between brand development efforts such as creating content for websites and blogs and the costs of marketing campaigns, advertising and events. However, that percentage assumes a business has margins of 10 to 12 percent after other expenses have been covered.
It’s tempting to think you don’t need marketing if your business is strapped for cash. But remember, marketing is an investment in your future sales, and without public awareness of your services or products, business will fall flat. So how do you come up with the cash to fund a marketing push if you don’t have those margins? We have some simple tips on how to raise cash for your marketing push and build momentum for a thriving sales cycle.
Crowdfunding is an innovative way to raise capital and market your company without digging into your own pockets. Sites like Kickstarter enable users to post their project, set a deadline and financial goal and ask people to pledge money, with the promise of specific incentives. For example, if you’re working on opening a design studio, people who pledge money could be promised a discounted logo design or similar service. Showcasing your project on Kickstarter or a similar crowdfunding site also helps spreads the word about your business and can attract thousands of viewers to your project.
Another option to creatively fund your marketing campaign: Look for assets you hold that can be cashed in. Stocks and bonds fall into this category, as do retirement accounts such as an IRA and 401(k)—but be careful with these, as you risk early withdrawal penalties and fees. If you receive regular payments from an annuity or structured settlement, you may be able to sell your future payments to a company like J.G. Wentworth for a lump sum of cash now, which you could then use to help fund your marketing push.
Get a Grant
To find open business grants, start at Grants.gov. Use the keyword tool and plug in the word “marketing” to find everything from marketing improvement programs to programs for investment in microentrepreneurs. Also check out the National Association for the Self-Employed; it offers grants of up to $5,000.
Get a Loan
Big banks may offer the traditional road map to business loans, but it’s often easier to find help at a local credit union. Credit unions typically offer lower fees and less stringent qualifications on loans. Credit unions are nonprofits that are controlled by members represented by a board of directors. Because they are controlled by their members, such institutions are often more vested in their surrounding community and businesses.
You also may be able to crowdfund a business loan. Sites like LendingClub.com work as a debt-based crowdfunding community to connect borrowers with lenders and investors. Apply for a loan from $1,000 up t $35,000 and a corresponding interest rate. Lenders earn an interest rate on the money loaned, and borrowers often get a lower rate and less hassle in securing their loan than through a traditional bank.