#4 – Get your business known
19 September 2019
On October we finance businesses for every important moment in their growth. Moments that provide a boost to their business. Such moments are called “Moments of Life”.
We like to tell our lenders more about what these important moments are and what a lender should pay attention to. In the fourth blog of the Moments of Life series we talk about ‘Get your business known’.
Get your business known
A company can create the best products and have the best team, but in the end the success of this company comes down to their ability to sell their product and retain customers. Marketing and communication is key in creating awareness around the company and its product. It expresses the competitive advantage and convinces people to buy their product, over that of a competitor.
Over the years marketing and communication has changed. Choices used to be limited to an advertisement on a bus stop, or a story in a newspaper, for example. These days marketeers can have many approaches to attack the market and claim a bigger share of the market. Projects that fall under the umbrella of getting your business known, are:
– Recording a TV commercial.
– Advertising on a billboard.
– Setting up a Facebook campaign.
– Contracting an influencer to promote the product.
Setting up a big marketing and communication campaign requires an investment. Normally, the results of a marketing campaign do not instantly translate into better performance; this takes time. Therefore, a company could chose to finance their marketing campaign. Because it’s an immaterial investment, it cannot be offered as collateral. As an alternative financier, we don’t just look at the collateral. Therefore, we see financing for these type of projects quite often. For example, Italian food, who borrowed €2,300,000 on October divided over 2 projects (Italian Food and Italian Food #2) to finance television advertising campaigns for their products.
Analysis by the credit team
Make your product or service known is key to the success of any business. Marketing and communication are important not only to gain new customers, but also to position the brand in the sector and the customer’s mind. However, one of the main problems is that these investments are usually difficult to quantify and track. It is challenging to assess their success, and sometimes even the best strategy may go unnoticed. Or even worse, a poorly executed campaign might be detrimental for the brand’s image. On top of these risks, their immaterial nature makes them unattractive for traditional financing.
In October, we like to dig a bit deeper, understanding how these investments fit into the business plan of the company and what are the estimated returns. Therefore, from a credit’s perspective, it is paramount to know the investment plan in detail: what is the target segment, what are the channels, how much it costs, etc. Also, it is very important to compare the size of these marketing efforts with the overall expenses, as well as to assess the feasibility of the objectives set. Finally, the experience of the management team with other marketing campaigns will be another point to consider.
– Mariano from the Credit Team in Madrid« go back to posts list