You’ve got the business idea. You’ve got the ambition. You’ve got potential customers. But have you enough funds for your marketing, to make your business a success.
To succeed you need to invest not just in time, talent and physical assets, but also money to promote your business. Marketing is vital to ensure potential buyers have heard about your business and know what it offers. It also helps establish their preference for what you can do, over the competition.
How much should you invest?
There’s no easy answer. You need to get your name known and entice customers to buy.
It would be easy to spend millions. You could advertise widely and provide promotions that encourage trial and repeat buying. But a few well considered bursts of activity that reach out to your well-defined customer group, can cost considerably less and have a lasting impact.
As a rule of thumb established UK companies spend around 7% of their turnover on marketing. Newer or smaller or high-growth organisations expect to spend more than this. Fashion and fast-moving consumer goods brands can easily spend over 35%. The importance of public perceptions and the scale of profit margins are key determinants.
So where do you get the money from?
Many people self-finance their investment in marketing. After all you’re the one who knows the likely return on your investment. And if you have funds available, for example from savings, a redundancy package or inheritance, an interest-free loan to yourself is a good place to start.
Government-backed start-up loans
You can access a Government-backed personal loan for business purposes and get the support of a mentor through the Start Up Loan scheme.
The average loan is £6,000 and 30,000 businesses have been supported. The maximium you can borrow is £25,000. Loans can be repaid from 1 to 5 years at a fixed interest rate of 6%. See more from the Start Up Loans Company.
There are grants available but this route takes a bit of luck and a bit of determination. Certain parts of the country and certain types of development have been targeted for help, and there is a range of different support available. Business start-up funding and support can be accessed via your local enterprise agency. In Hertfordshire, (where Marketing Zone is based) this includes WENTA (Watford), STANTA (St Albans) and Three Rivers District Council.
You can check out the support finder here.
Borrow from the Buddy Bank
You may be lucky enough to have good friends or family members who are in a position to loan you money to get your business off the ground. The advantage of a loan from your buddy is that there is mutual trust which is a good basis for coming to an agreement. The disadvantage is that people often don’t consider and agree what they will do if circumstances change. So agree what you’ll do in advance if, for example, your buddy needs their money back in a hurry or the business is slow to turn a profit making it harder to repay the loan quickly or if the business is hugely successful and your buddy feels they deserve a dividend as a shareholder.
Your marketing budget can be an inherent part of the money you borrow as a business loan from the bank. Alongside costs for staff, premises, transport and goods, marketing is an essential. You can go direct to your bank. You’ll need a clear business plan to provide the evidence that there is a market for your idea and you know what you’re doing. Most often banks prefer to provide loans secured on your assets. There’s some advice from Virgin Start Up about borrowing from banks here.
Everyone is used to online sponsorship pages where multiple people can sponsor someone, for example running a marathon for charity. Now the same tech can be used to raise funds for a business idea. You set the target and promote your idea online. If there are sufficient backers to hit your target the business idea can go ahead. It does require an idea that can capture potential backers’ imaginations and you’ll need to promote the crowdfunding idea to reach out to as many supporters as possible. From Kickstarter to Seedrs and Crowdcube, there are numerous crowdfunding websites to consider.
Venture capital funding
Investments from venture capitalists are another option for raising the funds needed. This is an option for high growth businesses usually where thousands or millions need to be raised, and the profit potential is good. Like crowdfunding there are websites where investors and those seeking to raise funds can meet. Venture Founders and Venture Giant are just a few of the many options which simplify access to venture capital. In return for funding you’ll have to trade a share in the equity of your business and you must have a high-growth, stand-out business idea.
At Marketing Zone, we can help you get the most out of your marketing budget. Our directors have worked on mega marketing projects for corporates with huge ambitions. We’ve also put together brilliant, cost-effective initiatives for a few hundred or thousand pounds for smaller businesses. To get the most from your marketing budget contact Mark on 07801 419800, email email@example.com or tweet @MarketingZoneUK