Startups in a nutshell: Nik started online wine merchant Red Squirrel Wine in October 2012 and has been running it out of Club Workspace Chiswick since November 2013. In the first of a series of startup diary entries, he talks about the difficulties he’s faced when allocating his marketing budget and some of the best ways he’s found to make a little money count for a lot. As he put it, 'You can't cellar your startup's cash forever - sooner or later you'll have to drink it.' Over to Nik...
There are innumerable differences between small business and big business. But perhaps the biggest is marketing. Big businesses can spend millions - the biggest, billions - on promoting their brand. While Coca-Cola won't quibble at $10 million for an advertising campaign, a small business might fret over another £10 of Adwords spend.
And know I do. When you're starting a business on a shoestring, it goes without saying that every penny matters. Whether you're boot-strapping, dipping into savings, borrowing from the bank, or are lucky enough to have some investment, spending cash on something as nebulous as advertising can be frightening.
Yet you've got to do it. Especially if you're an online startup like Red Squirrel Wine. Something I've learned in our first six months as a fully-fledged business is it doesn't pay to hoard cash. It's reassuring to see some squids in the bank account, but for an online business people only know about you when they know about you.
Take Google Adwords for one. With a bit of experience in online marketing and broadly knowing my way around the system, I naively went into this thinking I could manage our campaigns internally. Yet once the company really started growing, taking on staff, taking on new customers and all the rest of it, I barely had time to log in to our Adwords account, let alone manage it.
Thus we were spending a couple of hundred pounds a month on campaigns that weren't being properly managed, weren't attracting people to our website and certainly weren't converting investment into revenue.
Rather than being positively frugal, refusing to spend money on some proper external advice was actually wasting money.
It was painful to write the cheque, but I decided eventually that I had to bring in an agency to help. It was one of the best (and as it turns out best value) investments I've made. No longer are we throwing good money down the Google drain; we're now getting real returns. The ads work, people are seeing them, they're visiting our site and they're buying wine. It is costing Red Squirrel Wine more cash in the short-term, but saving us heaps in the long-run. Most importantly, we're making the pennies count. More online wine shoppers here, there and everywhere are now getting to know about us.
So let them know about you. Be creative. Look for the relevant, appropriate media for your message. Of course, get as much free publicity as you can - affiliate marketing, white label, social media and every other pay-it-forward kinds of promotion you can think of and find.
But if you're product is ready, the time to invest is now. Not later down the line when the cash is running out.
Nik has since been regaling us with his stories of setting up a business - read some more of his Startup Diaries here.
If you have any questions or comments, get in touch on Twitter @clubworkspace and @Nikdarlington.
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