The Relationship Between Finance and Marketing

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How you finance your business will determine everything from the rate of growth to the debt accrued and the percentage of ownership you hold.

But one factor that founders rarely consider is how finances can influence marketing decisions. This can mean reaching a wider audience but having less control over your brand. It can also mean that you have complete control, but significantly less cash to spend.

As you weigh your own options for financing, consider which scenario is more important: rapid cash plus growth or equity plus control. Your decision will help you determine which path is right for you and how you can get the most out of your marketing budget.

Related: No money? No problem. 30 Low-Budget Marketing Ideas for Your Business

money still talking

Ultimately, the growth of your business will be determined by marketing. Warby Parker, for example, created a business model that hundreds of other companies emulated, but his use of influencers and gorilla marketing threw the brand into a company worth billions.

Using equity financing (including VC financing) means giving up control of part of your business. The more percentage of ownership you give, the less control you have. If you restart your company or take out a loan, you will retain 100 percent of the ownership.

Your funding method will also determine how careful or aggressive you can be in your marketing. To boot, your marketing dollars will initially come out of your personal investment capital. In these cases, you should be able to show a strong return on investment from your marketing efforts because any spending will eat away at your bottom line.

VC-backed companies have their own challenges. Venture capitalists often have high growth expectations—sometimes unrealistic expectations. Quickly scaling a company requires a large marketing spend rather than the cautious approach you would use with the bootstrap.

Extend your marketing money

Whether you have millions of VC funding or $10,000 in personal savings, your brand message will remain the same. this to apply It will vary.

It cannot be overstated how important it is to know your audience. Clients will appreciate it and investors can see faster ROI. A study by Innovid found that 43 percent of respondents prefer ads based on their location, interests, and behavior.

If you decide to fund the company yourself or with a business loan, the best way to compete with companies that spend billions is to create targeted campaigns. Fortunately, there are several tactics that keep you laser-focused with your ads and messages.

Pay-per-click ads are great because they allow you to place ads in front of a very specific audience and tailor messages to those groups. Influencer and affiliate marketing also allow for precise targeting. As states reopen, in-person events will once again be a great option to meet your ideal customers where they are.

Go beyond demographics

You hear a lot about Netflix and Spotify’s algorithms and the role they play in audience recommendations because the services they provide thrive when they listen to what customers like rather than figuring out which boxes fit them.

To create these high-target campaigns, you need to understand your customers. While working on a limited budget, targeting college-educated women between the ages of 25 and 45 is very broad. You can’t afford to spend money putting your message in front of the wrong customers.

You need to understand the buyer’s journey and where your customers are in life: what drives them and how do they make decisions?

Once you have a candid understanding, you can more easily determine which tactics will work best and which messages will affect them the most.

Related: Demographics Alone Isn’t Enough to Position a Brand

As your budget increases, so should your tactics.

After years of spending, 66 percent of marketers expect to increase their budgets noticeably this year. More financial flexibility should mean more effort to expand your strategies.

Increase your ad spend and/or expand your tactics such as advertising on more platforms, adding in-person events, or using traditional media like radio and TV.

Your Facebook ads will look different from your Instagram ads, which will look different from your TikTok campaigns and YouTube ads.

Stick to your brand values

Oftentimes, investors want to see aggressive growth and it can be easy to compromise your values ​​for the sake of selling.

For startups and small businesses, it comes down to the product. IT compulsory fulfill your promise. One advantage of funding your company through personal savings and loans is greater control. In my experience, founders who have more ownership over their companies often choose to work with smaller agencies so they can have more control over their marketing assets.

what you to say It is as important as when you spend your money. How Sometimes communicating your brand values ​​in an unconventional way is more effective than using mainstream marketing channels. Last year, organic food delivery company Daily Harvest switched to home compostable containers. Despite rising packaging costs, this shift was strongly aligned with the brand’s mission to deliver healthy food made with the world in mind. Its VCs were also committed to sustainability and supported Daily Harvest’s transition to a more sustainable product.

Once your product is on the market, delivering on your promise to your customers will do more than just marketing for your brand. The key is to get your product into the hands of these first few thousand people. It all depends on your company’s needs and what you value most.

Related: Are Your Marketing Messages Targeting the Right People?

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