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Why Advertise Your Small Business

 Advertising is a tool that can transform a business into a larger, more profitable one. But that growth must be prepared for, paced and managed effectively.

At Block 1, unit 24 of the Tanjong Pagar Plaza, one bakery is doing brisk business. When lunch hour rolls around, employees in the nearby offices queue up for their red bean bread or kaya buns, presumably for their afternoon tea. Save for the printed business cards customers can help themselves to at the counter, the business does zero advertising. Not because they have no competition. Three other cake shops on the first level of the building sell the same range of baked foods. However, judging by the lines that form at lunch time, Shenton Cake Shop is emerging leader by sheer word of mouth.

Any businessman in owner Chan Vee Eng's enviable place, would perhaps refrain from investing in paid forms of advertising. But how many entrepreneurs are truly in this coveted position?

Is Advertising The Answer?

Owners of small businesses are generally aware of the value of advertising, but too many other demands require their immediate attention. For the most part, the advertising initiatives are below the line. The traditional "line" being the distinction between activities for sales and activities for marketing, a distinction most meaningful for accounting purposes. Thus it's common for small businesses to print cards that are distributed at the point-of-sale, to have branded packaging printed as well as promotional flyers when sales are low. It is less common for small businesses to actually place advertisements in the media, though some will sometimes succumb to niche print and radio.

Taking out paid advertisements in the media in order to attract attention, increase traffic and sales or keep a brand foremost in the minds of consumers is often a practice that small businesses cannot afford. It is a practice for larger, more established businesses.

And finances are the bottomline here. This is also why many small businesses operate without any real advertising plan or budget. Says Davina Tay, who owns Nurture-Craft Store, a toy store at Bukit Timah Plaza, "Advertisements definitely help, but the problem is cost." Ms Tay's business started in 1994, and she does not advertise. Instead, she participates in atrium fairs which gives her plenty of exposure and business. "I've never advertised because it's just not cost effective for me. Mine is a small business."

The reason entrepreneurs are reluctant to spend on advertising is that so many other factors in the marketing mix directly influence actual sales and profits. While no one would disagree that advertising is important for any business, large or small, for the latter, it's difficult to argue in favour of it when daily operations also need to be managed. What's more, advertising expenses are distinct from other business costs, and quite unlike the purchase of, for instance, office equipment thereby making other expenditures necessary to the operations. Since advertising is just one of the pertinent factors that affects sales, and since few managers can attribute a sales increase directly to advertising initiatives alone, many small business owners find it hard to spend on it, even while acknowledging its importance.

Advertising Habits Of Small Businesses

Like Mr. Chan of Shenton Cake Shop, most small business owners believe that providing good service and especially, a good product, creates satisfied customers who spread the word.

Louise Kratoska, who has owned and run the children's party entertainment business, Bouncy Castles on Holland Road for the past two years, agrees. "Word of mouth is a big factor in the business. Many of my clients are friends of other clients." Ms Kratoska also claims that placing an advertisement in the Yellow Pages has proven very useful as well. When she took over the business two years ago, the only advertising the former owner did was to put a small ad in one of the local publications for expatriates, her target market at the time. Seeing the lull in the summer months, however, convinced Ms Kratoska that she needed to capture some of the local market. Placing an advertisement in the Yellow Pages achieved precisely that. Since setting up their Web site for the business, Ms Kratoska has also made an alliance with the search engine, so that surfers could find her business easily.

Entrepreneur Sandra Sanoner owns the license to sell and distribute the French brand of organic infant and toddler food, Babynat, through her business, Healthy Babies Nutrition. She has always only used classified ads to attract her target market, and with some success. This year, however, Ms Sanoner is taking out a half page ad in the Finder for three months with the goal of growing sales. According to her, this step marks the decision to take the business to a higher level and she feels equal to handling an increase in her business at this point.

Increased or first-time advertising, particularly in cases where there was none before, invariably increases sales, resulting in more business and more work. A little goes a long way. Often, small companies require more employees after a spate of successful advertising, something that is not usually desired. More business means less time to plan advertising efforts, and if business drops off, less money is available.

Hence one compelling reason why small businesses don't commit much effort to advertising is that they have already have a fair amount of business. Any increase would make growth necessary, and demand a larger commitment of both time and money.

Advertising is the tool that can transform a small or medium business into a larger, more profitable one. But that growth must be prepared for, paced and managed effectively. Businesses use advertising to make their target audience aware of what they have to offer. The need for advertising is limited primarily to keeping the business name in the public eye.

Advertising On A Tight Budget

Experts suggest that for small businesses, particularly for new ones, advertising should be a last resort. In short, retail outlets should exhaust all the low-cost promotional methods available, particularly those that are free. Some favourites are flyers, phone calls, email to prospective customers you know, interviews on radio and press releases to local newspapers and relevant magazines. Only when a business has made good use of these initiatives will it be in a position to start thinking about advertising.

However, once ad space is bought, ads should be left in place. Even savvy businessmen tend to be impatient where advertising is concerned. Yet those in the industry know that it takes a lot of time for an ad campaign to do its job. Pulling an ad before it has had a chance to have impact is almost as bad as not putting out the ad at all.

As far as the material for the actual ad is concerned, it would be ideal to use the work of a professional. While most small and medium businesses and even some larger ones would shy away from paying an actual ad agency, this does not preclude them from availing of the services of a professional.

Many marketing executives and advertising copywriters do freelance work, and would charge reasonable fees for their services. Check with local ad agencies as they make use of freelancers as well. Or consult with other small businesses whose marketing you like.

One way of building a good advertising campaign is to let your customers write your advertisements, so to speak. Encourage and promote opportunities for customer feedback. Both those who are satisfied as well as those who have complaints can be of help in generating insights for your advertising. When you echo the things customers say in your marketing and advertising messages, you'll find that these quotes work very well as "body copy" for your advertisements.

Clearly advertising can be a powerful tool for your small business. It all depends upon how you want to use it, as well as what stage your business is at. Establish at the outset what it is you want to achieve through your advertising, whether it is to increase sales, draw traffic to your place of business or simply create brand awareness of your product or service. Harness it well and advertising will work to your advantage.

"This article was contributed by Christopher Lai, Director-Head of Business Development, Small Business Services, CSG, American Express International Inc."

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