As of 2015, there were an estimated 5.2 million SMEs in the UK alone, many of which were committed to long-term achieving growth and success. The desire to grow does not always translate into direct action or results, however, as some firms lack the financial resources (or knowledge base) to strategically invest funds and realize their underlying goals.
This can create significant obstacles to growth, particularly in terms of marketing your companies unique value proposition to a targeted audience. This type of strategic expense is what drives business ventures forward, so it is imperative that you are able fund this as and when new products are brought to the marketplace.
How to Fund Your SME Marketing in 3, Simple Steps
With this in mind, here are some simple but practical steps that can enable you to successfully fund and successfully drive your SME marketing campaigns: –
Create a Budget That Distinguishes Between Strategic and Non-Strategic Costs
We have already described marketing as a strategic business cost, as it has a direct impact on profitability and your ventures’ capacity for growth. In contrast, non-strategic costs tend to relate to operational measures and human resources, as while they remain important they do not actively empower the business to grow.
Not only must entrepreneurs recognize this subtle difference, but they must also ensure that they create a budget which prioritizes strategic expenses such as marketing. This often means saving money through the operational side of the business, primarily by using automation and technology to drive efficiency and reduce costs.
This capital can subsequently by reinvested into marketing, sales and customer service, while some can also be used as a contingency fund that supports sustained promotional campaigns.
Consider Raising Working Capital Through Accounts Receivable
Wherever possible, it is preferable to leverage your accounts receivable or cash flow to access funding that can be reinvested directly into the business. This negates the need to enter into a traditional financing agreement with external investors, while simultaneously enabling you to retain the equity that exists within your business and minimise debt. Of course, this is easy in lucrative, premium markets such as the Motorhome sector, which saw a 20.4% increase in sales in the year ending 2016. It can be more challenging in less lucrative or voluminous markets, however, so this may require a little more innovation on behalf of businesses.
One of the best and most creative methods of achieving this is to embrace factoring, through which suppliers like Market Invoice extend capital by purchasing accounts receivable. So, once you have completed an approved order and invoiced the client, you can sell this directly to lenders who will pay this in full. This provides an instant line of credit that can be reinvested into a sustained marketing drive, enabling you to sustain momentum and meet demand while it is at its peak.
Once your clients have settled their invoice in line with standard 30 or 60-day terms, you can then repay your debt safe in the knowledge that you have capitalized on a unique market opportunity.
If Necessary, Seek Out Investment Options That Offer Value to Your Business
Depending on the size of your venture or the business model that underpins it, you may need to seek out external investment as a way of driving your marketing campaigns. While this may not be ideal, the diverse and progressive nature of the current market at least makes it possible to chose an option that is tailored to the unique demands of your venture.
While equity crowdfunding and angel investment are both viable options in the modern age, it is important not to overlook more traditional vehicles such as small business administration loans. Available to start-ups and SMEs, these loans have an average acceptance rate in excess of 30% and usually combine competitive repayment terms with the benefit of not requiring entrepreneurs to forego equity within the company.
This serves as a compelling option for burgeoning businesses that need to promote themselves aggressively to succeed in a competitive marketplace, so long as they are able to present a clear-defined business plan and realistic financial projections. They also need to pay attention to their credit histories and the publicly accessible information listed through companies house, as this will have a key bearing on the success of their application regardless of how they intend to use the money.