If you’re starting a new business, you’re probably wondering the best way to advertise. Most advertising costs money. At the same time, running out of cash is ranked the #2 reason why new businesses fail in an analysis by CBInsights. Even if you have a lot of capital, you don’t want to throw your money away. To find success, you need to spend on the advertising you need.
Overspending on flashy business cards and expensive radio ads might not be the best or most economical way to reach your customers.
To find out what you should spend marketing money on, you need to:
- Know how to reach your customers
- Find out the cost of acquiring a customer
- Test the market to see if you’re right
In the early stages of your business, you might be able to advertise for nothing or at a low cost through free resources like social media and online forums. However, if no one knows your name, you’re going to need to get it out there somehow.
Find Out How to Reach Your Customers
For an entrepreneur with limited resources, every dollar counts. To get customers, you need to know what types of advertising to use. Today, there are many free and low-cost resources to help you get off the ground.
Are your customers on Facebook? Having your own business page costs nothing and gives you a place to establish an online presence. Similarly, you can build a website and advertise on Google for a relatively low cost depending on your market and method. Are your customers more traditional? Try door hangers and deliver them yourself or have one of your partners do it to save money.
When advertising a new business, don’t go for the most expensive options at launch. Be mindful. As your business grows, you can explore new ways to advertise. Your priority is getting customers and providing them with a service or product of value.
It doesn’t matter if the advertising is “ugly” or lackluster if it works.
Identify a Key Performance Indicator like CAC
Every new business needs a Key Performance Indicator (KPI) to measure success. One popular KPI is Customer Acquisition Cost (CAC). In short, the CAC tells you how much it costs to acquire a customer. Once you know this number, you can use it to avoid spending more than your business makes. There are many resources online to help you identify your CAC, but the gist is that you need to divide the total cost you spend to get a customer by how many customers you get within a time frame.
What you discover may mean it’s best to turn down fancy marketing products. However, it’s not where your focus should be as a new business. What’s important is having a solid product or service and getting customers.
Test the Market
By now, you know how you want to advertise and how much you should spend. Great! There’s one more thing to remember: test the market. Before you go all out on an idea that doesn’t work out as you expect, choose a sample area. See how your advertising works within this area. If you’re getting results, continue to the next area. If not, change something and try again. Finding out what works early on is invaluable as your business continues to grow.
It’ll also help you stay on track and spend on advertising that works.
When advertising a new business, it’s important to ensure you have a product or service of value first and foremost. After this, it’s about getting the benefits in front of your customers through free and low-cost advertising solutions. Whatever you choose should work with your KPI and budget.
Need Assistance Advertising Your New Business?
RiZen Metrics offers a wide range of products and services to help small businesses grow. We’re here to help at every stage of your business. Call or visit us today for what you need to get your business going.