Beating the Odds
"Doing business without advertising is similar to winking at a girl in the dark. You know what you are doing, but nobody else does." Steuart Henderson Britt
We have all heard the saying that “small businesses are the engine to the American economy.” I do agree with this statement, however, as an entrepreneur looking at starting a new venture, there are some intimidating stats staring you in the face. For example, a few of the failure rates for new startups are:
- Failure rate by liquidating all assets, with investors losing most or all of their money – 30% - 40%
- If failure refers to failing to see the project return on investment, then the rate is 70% - 80%
- If failure is defined as declaring a projection and then falling short of it, then it is 90%-95%
If you are planning on starting a business, the idea that you have a 30-40% chance of losing your investment should make you ask the difficult questions and come up with a plan on how you and your business will beat those staggering odds.
The answer to beating those odds is a multi-faceted one, and one that requires more than this article to answer. In fact, there is no magical silver bullet that will work for every new venture. However, there are some important steps that each entrepreneur should take in order to give their newly created business the best chance to succeed.
As an entrepreneur you will be the CEO, CFO, COO, VP of Marketing, VP of human resources and, more than likely, the one actually creating the product or performing the service. This is not an easy task to accomplish. In order to navigate all of the demands a new business presents, you will need to have a clear vision with short-term and long-term goals in place to help you remain focused.
Success will depend greatly on the processes you have in place to address all of the demands that you will face. These processes will guide you in the day to day to fulfill all of the financial, operational and marketing needs you will need to address in order to meet your goals and objectives.
As you plan to begin a new business one of the primary questions that need to be answered is, “how will potential customers find out about the services or products I will provide?” In an earlier article I wrote for the AlphaGraphics Blog (4 P’s of Marketing), I discussed the need for promotions to be a vital part of any business plan. This can’t be any truer than for a young start-up business.
By determining who your target market is and then promoting your business frequently and through a cross-media approach, you can build a strong brand awareness for your business among your target market. This will allow your product to go from an unknown state to a “considered” state, with consumers seeking out your product in lieu of a competitor’s.
When consulting business owners, one of the more common questions asked is how much should I spend on marketing. The answer to this question can be a little intimidating for business owners. I realize it can be difficult to swallow when someone tells you that you need to spend 3%-10% of your annual revenues on advertising.
There are many financial demands on a business – insurance, salaries, utilities, raw materials, etc. etc. etc. However, the only way you will grow your business is by investing in a strategically designed marketing plan. If you are worried about generating a return on your investment, here are several ROI stats that might ease your anxiety:
- Email Marketing generates an average of $40.56 in revenue for each $1 spent
- Internet Marketing generates an average of $19.72 for each $1 spent
- Mobile marketing generates $10.51 in revenue for each $1 spent.
(Source: Direct Marketing Association "Power of Direct" (2011))
So, the potential to generate strong returns on your marketing investment is present for practically any business. However, one thing to remember is that what works for one business will not always work for another. Some businesses in specific markets are able to enjoy a lot of success with direct mail marketing, while others have success through email marketing.The key to finding what works most effectively for your business is tracking the results of each marketing campaign and then tweaking subsequent campaigns to optimize your advertising investment. Tracking mechanisms can easily and affordably be implemented into any type of marketing communication to allow you to know what is and is not working.
Why should a business owner worry about advertising and building a brand image that will stand out to customers? Because your target customers are very busy and are bombarded with an average of 3,000 advertisements per day. If you are not communicating to your customers, someone else is. So, how can you break through the noise produced by over 3,000 daily advertisements? Here are a few suggestions:
- Utilize customized and relevant data on direct marketing advertisements.
- Make sure that your advertisement’s copy is direct and concise.
- Present your customers with a call to action.
- Utilize cross-media marketing, so that potential customers see your coordinated message on a variety of marketing mediums.
- When appropriate, implement 3-Dimensional mail pieces which will stand out from the more typical “junk mail” that is received on a daily basis.
- Utilize social media, which will allow you to communicate with and engage your customers on a frequent basis.
If you are thinking about starting a new business you will be required to make many critical decisions on a daily basis which will steer the direction and ultimately decide the destination of your venture. With all of the needs that must be met by a new business owner, one must not forget to promote their business. By implementing a cross-media marketing strategy, you’ll be able to put the odds back in your favor.