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Creating Demand for Your New Business and Raising Funding for It
When you start a business, one of the earliest challenges is getting funding. Another challenge is marketing and distribution. Some business owners say buzz could be the answer. Buzz, or intense word-of-mouth marketing, can help you get attention for your product or service and also convince would-be investors to fund your business.
A Real Life Example
Beth Ann Catalano and Tina Hedges use their years of experience in the beauty industry to help new businesses launch their products. The two women, who worked at L'Oreal, Estee Lauder, and other cosmetic giants, run a business incubator called Twist. The firm works with new businesses, including ones that specialize in closet organization, women’s golf clothing, and beauty products. One recent successful launch was Jonathan Product, hair care products that are available at Victoria’s Secret, Sephora, and other retailers. Catalano and Hedges say that when they speak at seminars and meet other business owners, they notice that most entrepreneurs face two challenges. “They all need more understanding of how to raise capital,” Catalano says. “A lot of them rely on a rich uncle or husband to subsidize their business. They don’t really have a plan.” The second challenge is that the businesses don’t seem to have a brand identity. “The brand looks one way, the business cards look another, and they’re struggling with pulling it all together,” she says. Having a brand identity can help a business create buzz. That’s how Catalano and Hedges helped Jonathan Antin launch Jonathan Product. Antin’s reality show on Bravo network is called “Blow Out.” The women wrote business plans from their apartments in New York City, met with investors, and networked so they could meet people that would help with distribution. The products appeared on “Blow Out,” and later on QVC. The attention helped the product gain popularity. “We got it to a $13 million retail business,” Catalano says. “We went back to our investor and said we can no longer run this out of our homes.” The angel investor, who owns 58 other companies, wrote them a check that helped the product expand. Of course not everyone can get publicity from a cable television program, but the important thing here, say Hedges and Catalano, is creating buzz. What Buzz Is
The word “buzz” is sometimes used interchangeably with public relations. By creating buzz, you build excitement about your product or service instead of merely announcing its existence with expensive print, radio, and television advertising. “You need to be meeting people, telling people about your business,” Hedges says. “You have to be your own billboard.” Walter J. Carl, Ph.D., assistant professor of communication studies at Northeastern University in Boston, says a small business that wants to create buzz has to first decide what the goal should be. “A short-term goal would be to get exposure and attention for your business,” says Carl, who is on the advisory board of the Chicago-based Word of Mouth Marketing Association. “Long-term would be to create loyalty for the product.” George Silverman, author of The Secrets of Word-of-Mouth Marketing: How to Trigger Exponential Sales Through Runaway Word of Mouth, (AMACOM) says creating buzz is a good way for a home-based business to promote itself. “That’s the only way they can compete with the big guys because they can’t afford large amounts of advertising,” he says. The key is “not just talking about the product but talking about it in a way that will promote sales.” Word-of-mouth advertising is effective because some people have become jaded about advertising and slick corporate campaigns. If a friend or relative recommends a new product, people tend to trust that person more than a well-paid celebrity endorser. The trick is to reach these influencers, or people who get other people to purchase items and follow trends. How to Create Buzz There are several techniques to creating buzz. The low-tech version begins with talking to people you know, and generating interest through networking. The high-tech version is online, using the Internet to help generate enthusiasm about your business, mostly by people you haven’t met. Start small. Talk to your friends and relatives. Mention your business whenever you get together with your acquaintances for crafting, school-related activities, and volunteer work. Don’t be an aggressive salesperson. Just mention that you have started a new business and you would like advice, or you want people to try your product and tell you what they think. “The biggest motivation of word-of-mouth advertising is altruism,” Carl says. “People are willing to help out because they identify with someone who is starting her own business.” He adds that another motivation is to share a great experience. That means you need to make your product exceptional, not just slightly better than other products. “Pay close attention to how customers are using your products and services, what’s important to them, and build that into your product design. You increase loyalty to the product by showing that you are listening and being responsive,” he says. Silverman agrees. “You need a remarkable product,” he says. “Something’s got to be twice as good, five times as good to be talked about. Most things are only 25 percent better.” Talk to friends of friends, people you’ve lost touch with, family members who could use your product. Hand out your business cards, brochures, or even samples when you run into acquaintances or attend community meetings or relevant get-togethers. “Say you make something that has to do with kids, you might want to do it around moms,” Carl says. “Try to find places where moms are already talking about products and services. That could be book clubs, movie theatres where they bring kids during the day, existing communities of people.” The idea, he says, is to reach people who will influence others’ purchase decisions. Try teaching a class. For example, if you own a landscaping company, offer to teach a class on xeriscaping at your local library. Stay after class to network with attendees. You can also help a local charity and get attention for your business at the same time. If a nonprofit is hosting a fundraiser, donate your service as part of a silent auction, and leave a stack of your business cards next to the auction sign-up sheet. In addition to generating enthusiasm among potential customers, you need to generate interest among the media. If your product is edible, host a pot luck at your home and invite reporters from your community newspaper. If you donate samples of your new dog treat to your local animal shelter, send photos and a blurb about the giveaway to your newspaper. (Be sure to write off your donation as a tax deduction.) Some news media even have places on their web sites where you can post comments. Ask your local university radio station if you can speak on the air. The High Tech Version
Buzz marketing includes viral marketing, which means using pre-existing social networks to increase your brand awareness. That includes using the Internet to spread the word about your product. You can create a video, game, or web site that attracts attention to your product. There are several web sites for small businesses, amateur filmmakers, and others to generate buzz. Silverman says some web sites offer low cost ways to get attention for a new business. For example, www.stumbleupon.com helps web surfers find sites that are not heavily advertised. Users sign in, pick a topic such as shopping or books, and then recommend sites to other web surfers. There’s also www.digg.com, in which people write and submit articles. Readers promote the topics that they want. Another site is www.Del.icio.us, which bookmarks people’s favorite web sites and allows people to view others’ favorites. “You’re not dependent on people finding you on a search engine anymore,” Silverman says. Getting to the top of a search engine list — making sure your business appears on the first page when someone Googles your industry — can be expensive. Blogging is another way to get the word out about your product. If you have a blog, mention your new business on it. If you don’t have a blog, start one on a topic that is relevant to your target market. “People hear about interesting and useful blogs, and other bloggers find them and point to them,” Silverman says. “The press is extremely tuned into blogs.” You can also post a comment on someone else’s blog. The Web is also useful for networking. If you want to find a group of people who might be interested in your product or service, try www.meetup.com, which lists groups of people who meet for everything from knitting to investing. There are also discussion forums, community groups, even web sites where people show their homemade videos. On www.youtube.com, for example, authors have posted three-minute interviews in which they talk about their new book. On www.myspace.com, small business owners have set up pages for their businesses instead of for themselves. “When you’re looking at building a brand, it’s really not only just talking to communities and individuals, but really researching and looking online and building future relationships,” Catalano says. It also means building relationships with people who are already affiliated with groups. Some Cautions
Whether you go online or talk to your coworkers, don’t try stealth marketing or undercover marketing, “You don’t want to pretend you are something you are not,” Carl says. “Don’t say, ‘I just tried this product’ and it’s your product. They will be skeptical of that.” Instead, be honest. “People respond really positively to disclosure,” Carl adds. “Say, ‘I’m starting a new company, I am making these in my basement, maybe you would find it useful too.’”
Can It Get You Funding?
While buzz is not directly related to funding, some businesses use buzz to prove they have a viable product, that people are interested in it, and it will likely generate revenue. If you can print out Web pages in which people talked about your product, or if you can show documentation that your sales went up after you gave away free samples, or if you have news clips about your interesting or offbeat product, lenders and investors will be more likely to show interest.
Generating low-cost buzz can also help you prove to an investor or lender that you are careful with your company’s outflows, and might therefore be a good risk. “Investors will be very shy of any business plan that has a lot of overhead,” Hedges says. “Showing you are conscious of that until you have proof of concept is very important to venture capitalists, friends, family, and banks. You don’t go out spending dollars before you get them.”
Carl says buzz can also influence retailers. A store will be more likely to carry a product that seems to be in demand, or at least talked about, than an unproven product that seems to be just launching.
He also cautions that buzz takes time. Don’t expect to achieve results in days or weeks. It might take a year or two.
Hedges agrees. “There are always stories about people who have had somewhat overnight successes, but in general when you look at starting a business from zero, look at two years for total development of that business.” HBM
Previously published in the February 2007 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com
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