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The Small Business Administration reports that there are 29.6 million small businesses in the United States, representing every industry and covering a vast range of products, services and skills. This variety of businesses can mean diverse opportunities and challenges to grow.
In a recent study, our company, Kabbage, found that 72 percent of the business owners we surveyed expected to grow revenue by more than 20 percent in 2018. In light of National Small Business Week (April 29 to May 5), and the fact that we’re more than a third of the way through 2018, it’s a good time to ask, how can owners in this category better achieve their goals?
Partnering with Bredin, a small business research agency, we surveyed 500 small businesses of varying ages, across different categories, to uncover the lessons businesses need to achieve faster, more dramatic growth. The results offer insights for younger, growing businesses handed down by more established companies.
A primary finding? Many of thoses older companies regret not investing more in marketing sooner. That makes sense: On average, marketing/advertising spend is companies’ smallest expense each year. However, marketing is a key investment for any business, and many wish they’d invested sooner. In fact, asked the number one aspect of their business they wished they’d been more knowledgeable about earlier, to prepare for greater growth, 28 percent said they wished they’d known more about marketing strategies and channels.
Specifically, the study found that, on average, marketing represents only 8 percent of total spend for companies from their first year in business to their 20th year, or longer. Yet in hindsight, the older companies surveyed said they wished they’d doubled, tripled or even quadrupled that expenditure at every age of their business in order to see greater growth. Specifically:
- In the first year, marketing represented, on average, 7 percent of their total costs.
- Alternately, they wished they had attributed 28 percent of their total costs to marketing.
- From years one to four, marketing up ticked up slightly, to 13 percent of total…
