Working Capital

Using Capital for Marketing: Why Marketing Is Important and Where to Get Funding

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Most new businesses don’t have enough cash in hand to invest in marketing their services or products. As a result, cash-strapped businesses often rely on word-of-mouth referrals from friends and family members. Word-of-mouth is a great, highly effective strategy, but it takes time and effort to build relationships with potential customers. Time a lot of growing companies just don’t have. When it comes to building and growing your business, this is one of those times where the adage “it takes money to make money” rings true. The question is: Where do you get this business funding from? One way to boost your marketing efforts is to use capital for marketing.

What Is Marketing?

Marketing is the act of promoting and selling products or services. Marketing includes a few different strategies, including market research and advertising. There are also different types of marketing, including:

  • Influencer marketing
  • Affiliate marketing
  • Relationship marketing
  • Viral marketing
  • Green marketing
  • Keyword marketing
  • Guerilla marketing
  • Outbound marketing
  • Inbound marketing
  • Content marketing
  • Search engine optimization

Marketing involves what’s known as the 4 Ps: Product, price, place (or distribution), and promotion. These components help you define your marketing options so that your offering meets a specific customer need or demand. 

Why Is Marketing Important?

Marketing is important because it gets people interested in your products or services. Marketing lets you reach out to your target market and ideal customers in a meaningful and relevant way, with the intention of increasing sales. Marketing is important for building and growing brand awareness – without knowing who your company is and what it is you do, people won’t have the information required to make an informed buying decision. 

Additionally, by not having the funding to invest in marketing you’re losing out on a lot of opportunities. Chances are your business is going to grow slowly (if at all), and you’ll end up leaving almost all of your total growth potential on the table. Without capital for marketing, your business isn’t getting in front of your target customers (or enough of them) to make your business a success. And when your marketing investments DO pay off, you’ll need cash on hand to cover expenses and payroll for all those additional projects. Having enough cash flow for marketing means you can put your money to work growing and scaling your business to have the most impact. 

Where Can I Get Funding for Marketing?

Having funding for your marketing efforts is essential so that you can grow your business and your revenue. When people are well-informed about your products and services, your sales will increase. One of the most challenging aspects of marketing is figuring out where you’re going to get funding for your marketing efforts. Fortunately, there are several viable options available when it comes to funding your marketing strategy. 

Using capital for marketing

When you’re ready to start using capital for marketing, freeing up extra funds is an absolute game-changer. It can allow you to scale your reach, grow your business, and drive opportunities in a way you wouldn’t have been able to if you were just worrying about keeping the lights on. One of the quickest and easiest ways to free up working capital for your marketing efforts is to get outstanding invoices paid ahead of net terms using invoice funding. 

Invoice funding

Using capital for marketing from invoice funding (aka invoice factoring) to fuel campaigns, build your brand, and get the word out about your business is an excellent use of marketing funds. Not only do you avoid the lengthy application processes associated with traditional funding methods like bank financing, there’s also minimal paperwork required, and your credit history is not a major factor. You’re simply advancing capital on work you’ve already completed in order to reinvest in your business. Once you’re set up and approved with FundThrough, you can receive funding within days of selecting an invoice to fund, so you can keep your marketing efforts moving.

For example, let’s say you fund a typical invoice for your biz worth $50K which is due in 60 days. You can either do no marketing for 60 days and collect the full $50K or you can pay a 5 percent fee (2.5 percent/30 days x 2) to get paid in days. You can then spend that $47,500 on marketing – a pretty big sum and a solid investment in growth – in those same 60 days. You’d only need to generate a return in deals won greater than the $2,500 invoice funding fee to come out ahead. Not to mention all the intangible benefits of brand awareness raised during a targeted marketing campaign that ultimately contributes to winning future deals.

Grants for marketing

Another source of funding for marketing is grants. There are grant programs available based on location and industry, from both the local and federal government. While grant funds can be a great source of “free” money, they often have a lengthy and time-consuming grant application process, and you’re competing with many other businesses for funding. 

Self-fund

You can always choose to self-fund your marketing efforts by investing your own capital into the business, but this comes with greater financial risk in the event your business runs into trouble. 

Loans for marketing

One popular funding method for many small businesses is a business loan for marketing. It’s convenient in that you get a lump sum of capital to execute a marketing program, with fixed repayment terms. On the downside, the eligibility requirements can make it hard to qualify, and they take some time to get in place due to the lengthy application process. You’re also going into debt to fund your business growth, which isn’t an ideal situation. A related option in a line of credit, which you only draw on when you need capital for marketing. Additionally, some businesses put marketing expenses on a business credit card, which can be risky – you could end up paying expensive interest for an initiative that doesn’t pay off.

Partner up

If you don’t mind working with an outside partner to secure capital for marketing, you might consider taking on venture capital or crowdfunding. With crowdfunding, you aren’t required to give up equity, but you don’t get the benefit of a partner invested in your success. On the flipside, most crowdfunding campaigns aren’t successful, and come with a lot of stress. 

How to Use Capital for Marketing

The most important thing to keep in mind when deciding how to use capital for marketing is to have a marketing plan. Marketing is a great way to get the word out about your business. However, it can also be expensive. Having a business development plan for spending your marketing capital will help you have an idea of what sort of return you can expect from your investment. Some things to consider when developing your marketing strategy include: 

  • Who is your target audience?
  • Where is your target audience spending time? 
  • What are your core business goals/desired ROI?
  • How will you measure the success of your marketing efforts?
  • Topics of interest to your target audience
  • How much you want to spend
  • How you’ll execute your strategy

Marketing dollars may go towards: 

  • Branding – creating a brand identity as well as marketing materials like a brand kit.
  • Website – including design, hosting, and keeping content up-to-date.
  • Social media – creating content for social channels requires resources.
  • Online advertising – search engine ads are a popular way to reach your customers.
  • Traditional advertising – don’t forget about the value of print ads, radio, and television ads!
  • E-newsletters – again, building and maintaining a list, as well as creating content on a regular cadence requires investment.
  • Videos – video content is an excellent way to showcase your business, but videographers or just DIY equipment costs money.
  • Staff training – if your marketing team will handle efforts in-house, don’t forget to invest in staff training to keep skills fresh and to stay on top of best practices.

Once you have access to capital for marketing, know who your target is and where they’re spending their time, you can start investing in those channels. Keep track of spending and results, and adjust regularly for best results.

Using Capital from FundThrough for Marketing

Many savvy business owners look at marketing as not an expense, but as a business investment. Smart small business owners know how to use financing to fund these plans. Before you take on debt to fund your marketing campaign, though, ask yourself if there’s a better way to fund your marketing efforts. Most experts agree that your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend between 2 and 5 percent of their revenue on marketing. 

Freeing up capital for your marketing efforts by funding an invoice with FundThrough is easy. We offer innovative solutions that help free up cash for you to market and grow your business on your terms. See if you qualify for our Velocity or Express funding options, or contact us at [email protected] or 1-800-766-0460 to get started.

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