I have recently set up a high-pressure water cleaning small business as a sole operator. I have two approaches to marketing at this stage, but would appreciate a view on whether these are appropriate. I advertise in our local paper regularly, and have designed a flyer for letterbox drop with a few key messages about the service. I will work in specific suburbs near to home to gauge interest. I expect building my profile to be a challenge, and would welcome any suggestions.
THE first thing you need to make sure of is that you know your customers and you're clear on what they are looking for from you as a service person. Are you dependable and trusted in the community? Is your service good value and are you in the best in the business? Make a list of the attributes that you think your customers value and make sure every piece of marketing showcases these traits.
Letterbox drops generally have a low take-up, so don't spend a lot of money on the design, but rather use it as a test case. Advertising in the local paper is a good strategy, especially if there isn't much competition in your area. I assume you have a website that people can look at, so make sure it's up-to-date with valuable information. Put up pictures of yourself and your staff, before and after photos of the jobs you've done, testimonials from satisfied customers and, of course, your contact details. People want to know that the person they are hiring is someone they can trust, so market yourself in a way that will resonate with your potential customers.
My partner and I have been running a creative communications/design business for about four years. Three years ago we secured a $30,000 overdraft and since then our cash flow has been OK. We've managed to save $12,000 and last year's turnover was about $205,000 with $75,000 clear profit. While we are hardly making millions, we are doing all right and slowly building our client base and reputation. Neither of us own a home and between us we have maybe $10,000 personal debt. We wanted to increase the overdraft to between $50k and $80k in order to consolidate that debt, take advantage of the low interest rate and ensure our cash flow for the next two years. We were told by the bank manager that $50,000 is as far as they will go unsecured and even then she didn't exactly sound as if it would happen. What can we do to secure an increase in the overdraft? Would you suggest trying another bank, saving more for longer, etc?
YOU can definitely try another bank but an unsecured overdraft probably taps out at around $50,000 no matter where you go. Think about it from the bank's perspective. They are going to want protection in the event something goes wrong with the business, so they'll want to know what you'll be able to sell. In the creative communications industry, your most valuable asset is you which is not easily sellable!
I understand why you want to increase your overdraft, but your best option is to continue to save and use that money as the safety net you need.
Right now you have negative carry which means you're earning a low rate on your $12,000 savings but will pay a high rate on your overdraft. So if you need more cash, save more cash and use that for liquidity purposes. Head down, bum up, mate, and good job thus far. It sounds like you're giving it a good go.
Mark Bouris is executive chairman of Yellow Brick Road, a wealth management company and small business adviser offering products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax. www.ybr.com.au
If you have a question for Mark Bouris, email it to Max Mason at max.mason@fairfaxmedia.com.au.
Frequently Asked Questions about this Article…
What small business marketing strategies work for a new sole-operator high-pressure cleaning business?
Focus on knowing your customers and showcasing the traits they value: dependability, trust and good value. Use low-cost local marketing (targeted letterbox drops as a test, regular ads in the local paper if competition is light) and make sure your website is up-to-date with photos of you and any staff, before-and-after job shots, customer testimonials and clear contact details.
Are letterbox drops effective for local service businesses and how should I use them?
Letterbox drops generally have a low take-up rate, so don’t overspend on design. Treat them as a low-cost test case by targeting specific nearby suburbs to gauge interest rather than relying on them as your main lead source.
Is advertising in the local newspaper a good strategy for small local services?
Yes — advertising in the local paper can be a good strategy, especially if there isn’t much competition in your area. Combine it with credible online content so interested customers can learn more after seeing the ad.
What should I put on my website to build trust for a local trade or cleaning business?
Include up‑to‑date information, photos of yourself and any staff, before-and-after images of jobs you’ve completed, testimonials from satisfied customers and easy-to-find contact details so potential clients can see you’re reliable and experienced.
How can I build a strong local profile and reputation as a sole operator?
Market the attributes customers value (dependability, trustworthiness and value for money) in every piece of marketing. Be visible in the community, deliver consistently good service, collect testimonials and show real examples of your work to make it easier for locals to hire you.
What can small creative businesses expect when asking banks for larger unsecured overdrafts?
Banks typically cap unsecured overdrafts (the article notes about $50,000 as a common maximum). Lenders want protection if the business fails, and in industries where the main asset is the owners’ skills (not easily sold), banks can be cautious about increasing unsecured facilities.
Should I increase an unsecured overdraft to consolidate personal debt and support cash flow?
The article’s advice is to be cautious: unsecured overdrafts often top out around $50,000 and carry high interest. If you have savings earning little and an overdraft with higher interest (negative carry), it’s usually better to keep saving to build a safety net rather than rely on a larger unsecured overdraft.
Who gave the small business and overdraft advice and what services does his company provide?
The advice was given by Mark Bouris, executive chairman of Yellow Brick Road. Yellow Brick Road is a wealth management company offering products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax (www.ybr.com.au).
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