I very much enjoy having money, so why would I tell new business owners this? Why would I turn away their business? Firstly, because it’s the right thing to do, and secondly, it’s really all part of a (not so) evil, long-term masterplan… but more on that later…
I’m not sure what the current statistics are but an incredible number of small businesses fail in the first few years. Why is that? In my opinion there’s two main, overall reasons. An “Event” occurs that causes the business to fail or they just slowly (and painfully) run out of money.
In both cases, NOT spending any money on advertising would help. SAY WHAT…?!? I can feel multiple people screaming at me right now but hear me out…
Reason number one that businesses fail is an “Event”. A natural disaster, a death, a divorce, a falling out of business partners, a theft, a fire. There are many other things that could also happen and hopefully you have insurance but the ONE thing that would ride a business through these kinds of disasters is MONEY. Reason number two that a business fails is slowly running out of money. It takes a long time for a new business owner to figure things out and get good at “balancing the books”. Basically it takes a while to start consistently having more money come in than what goes out. The way to fix this? Protect your funds. Don’t spend money on anything that is not 100% essential, like inventory or electricity.
Businesses that are well capitalized survive. If your business starts out with oodles of money then by all means spend a bundle on advertising because you’ll still have plenty in reserve. MOST businesses though, start out UNDER-Capitalized and after they’ve blow a ton of cash “trying” advertising that isn’t a good fit, they run out of money. 50% of all advertising works, you just don’t know (in terms of your business), which 50%. By the time you’ve figured it out you’re broke and looking for a way out. New business owners that are running out of money start to look a job to go back to. They spend even less time on the business and failure ensues.
So when I’m sat across the table from a new business owner and he or she is looking at me like a deer in headlights, what do I tell them? Most new business owners that I meet with (the one’s that had an “Entrepreneurial Seizure” and started a business) are permanently overwhelmed, continually harassed and never really sure what they’re doing. I’ve been there, I was like that too. I tell them that they literally shouldn’t spend money on ANYTHING, especially advertising. Now, did I say they shouldn’t advertise…? NO. Did I say they shouldn’t do any marketing…? NO. They absolutely should, but for free.
I could write a textbook on “Guerrilla-Marketing” or the “Art of promoting your business on a shoe-string” but you basically have to get creative and find ways to get the word out without spending any money. All Marketing and Advertising is experimentation, figuring our what works. Best to do it without wasting money. It’ll also give the business owner time to figure out what works for their business. Almost all free advertising involves leg-work. The business owner will be forced to be on the sharp end of things for a while, seeing for themselves what people respond to and what they don’t.
Need a quick list?
- Social media is pretty much free…blast away.
- Mailchimp (and other email marketing tools) have free accounts…again, blast away.
- Get your kids (or nephews) to go pass out flyers at the mall.
- Go call in to every one of your neighboring businesses and introduce yourself, offer them something.
- Use that thing in your pocket, or did you forget it’s a TELEPHONE and that you can call people on it…
- Text everyone you know, twice.
- Use other free services like Craigslist, Facebook Marketplace etc.
- Ask people to share in THEIR advertising.
- Call TV and radio stations and ask how you can featured for free.
- Write an article and send it to the paper and every magazine in town.
- And on and on and on…
Oh, and the (not-so-evil) masterplan I mentioned earlier…? It really is quite wicked.
Here’s what I do. I get with a business owner and coach him or her (for free) on how to get through their first year unscathed. Then, when they emerge healthy on the other end, they’ll have even more money to spend on advertising… AND they’ll know where to spend it because they’ll know what works. So, yes, I miss out on a years worth of revenue but I know they’ll be happier, healthier clients down the road…