I am often struck by the number of would-be entrepreneurs who invest heavily to open a business, but fail to budget for keeping it open until it is profitable, much less for promoting it in order to speed profitability along.
Developing, packaging, inventorying and providing a product or service cost money. Moreover, those costs are up-front. You only become profitable as incremental profits from incremental customers spending a little here and a little there pile up over time.
A big duh? I agree. But, well, see Paragraph 1.
Customers rarely materialize from thin air. Something must bring them to you.
The “something” may be what is commonly called Word-Of-Mouth (WOM). Don’t believe anyone who tells you that WOM is the best form of advertising. Though arguably the most credible, it is also the slowest, the hardest to effect on purpose, and the hardest to control. If you are counting on WOM to work for you, be sure to budget sufficient funds to keep you in business until it kicks in. Assuming it does. And, given that the Internet is a tool of misinformation as much or more than of information, beware WOM that turns against you, merited or not.
The “something” may be a live sales force, whether in-person or on the phone. Live sales have built many a successful business. Just remember that you’ll have to pay for your sales force — not to mention phones, mileage reimbursements, uniforms, stationery, etc. — for a long time before they begin producing a return.
And, of course, the “something” may be advertising. That happens to be what we do here at the RESPONSE Agency, and it costs money, too. There’s serious money in creating it, and huge money in placing it where potential customers will see it.
Sadly, I often hear from a company only after it has found that WOM is taking too long, the sales force isn’t making headway, and money is thus at its thinnest. When I work up the cost of a testable, measurable, evidence-based direct response marketing program, they are aghast. “That much?” they gasp. Lost on them is that what I have proposed is a pittance compared with what they have already sunk into planning, development, production, packaging, inventory, facility, stationery, legal fees, rent, signs, personnel, etc.
So here’s a hint. When you’re in the planning stages, include marketing. That tends to work better than trying to add it later after your funds are gone.