Bankers don’t like to do non asset based lending, so sometimes owners of service firms are under-capitalized. When a service firm delivers great value for its clients, the owners learn how to manage cash well enough to self fund continued hiring. So they typically need more money to fund stepped up marketing, which is another reason bankers seem reluctant to finance service firms. Bankers do not feel comfortable evaluating the quality and expected return on investment in proposed marketing campaigns.
Occasionally, a private investor is an alternative to being repeatedly turned down by traditional bankers, but they have the same difficulty evaluating the ROI on marketing.
The 13 investors who pooled their money to form The Service Industry Fund™ 15 years ago look to me to evaluate the scalability and resilience of high potential service firms. I have noticed that most owners of growth oriented service firms are willing to invest in their personnel. They’ll pay top dollar for a scientist/inventor, a rainmaker, or a controller, but they tend to skimp when it comes to marketing. They’ll bring in interns or ask an entry level employee to do their press releases, social media, and websites updates.
Too many owners of service firms are convinced that no one can understand their businesses as well as they do. No one could convey the benefits and differentiation better than they can. So why should they spend money on high priced marketing talent? I also think the frugal behavior is a result of their not knowing what they don’t know about the art and science of marketing.
Recently, we reviewed the portfolio to see which service firms have been the most successful and concluded that the firms that invested in proven marketing agencies and executives have done the best. Those firms were able to package their processes through more effective merchandising (PRODUCTIZE). Those firms were able to quantify their investment in process and product development and marketing so they could price their licensing or certification deals and protect quality.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.