Transcript of actual conversation:
Potential Client: Tell me the truth. How important is advertising in this economy?
Chuck: It’s critical. When there is a lot of money in circulation it’s not difficult for most businesses to attract their fair share of it. When the velocity of money slows, small businesses have to work harder than ever to keep enough customers coming through the door.
PC: If I had the money, I’d advertise now.
PC: It would help to differentiate me from my competitors.
Chuck: Why do you want to do that?
PC: Isn’t being different what makes a company marketable? It’s what would get me into people’s minds. Prospects would be more likely to choose my company.
Chuck: If I’m hearing you correctly, you’re saying that you believe advertising will bring you new business.
PC: Well, yes.
Chuck: Then why aren’t you advertising?
PC: I can’t afford it.
Chuck: You can’t afford new business?
PC: Well . . . new business is important. I need to keep money coming in ahead of my bills. I know, I should be advertising.
Chuck: Why are you hesitating?
PC: I’m in an industry that doesn’t traditionally advertise. I don’t know if I should or not.
Chuck: A minute ago you said if you had the money, you’d be advertising right now. Is the economy effecting your business?
PC: Yes. We’re hurting.
Chuck: How long can you afford not to invite new customers to do business with you?
PC: Honestly? I’m scared. I’m scared of what could happen, or more accurately what might not happen. I’m scared that the return on my investment won’t be measurable.
Chuck: I’m hearing you say that you don’t have the knowledge to make sure your advertising investment will pay for itself. What knowledge do you need? What information are you lacking?
PC: I lack knowledge of marketing. I don’t know enough to understand which is a good idea and which is a bad one. What kind of return will my advertising investment bring? How can I predict it? If there were some resources that I could use to learn the basics of marketing . . .
Of all the reasons to advertise . . .
Increasing sales is by far the most important. It’s been said that during good times businesses should advertise, and during bad times they must.
During the rough times, though, the stakes are much higher.
When customer counts drop, its common for businesses to find that operating costs exceed revenues. Most companies have some cash or credit which will allow temporary negative cash flow. The length of time they can sustain operations is their “staying power.”
Every additional day of negative cash flow drains those reserves.