Stop Advertising: You’re Slowly Going Broke

One of the most shocking lessons I learned in business was that I had to stop advertising because I finally realized if I didn’t, I would go broke eventually.

You see, I had become the manager for the family business after our manager quit. He had done it for nearly 30 years and he was ready to move on. The assistant manager didn’t want the job. Uncharacteristically, I volunteered and stepped in. I was nervous about it but I wanted more money for me and my family. I was bullied a lot as a kid and lacked confidence in myself and that made me yearn for the respect of my fellow business owners, which was one of the reasons, besides making more income, I wanted to be the manager.

When I stepped in to do the job, I quickly discovered the job wasn’t as easy as it looked. My ability to bring in customers to buy wasn’t any better than the manager’s before me. So I went looking for ways to improve that. During that search, our town’s largest employer closed their doors and after 30 years of injecting millions into our local economy every year, the faucet was shut off. Every business in town was hit and scared, including mine. Some closed. Some hung on by their chinny chin chin. Our business was hurt. I was facing decisions of letting people go which pained me greatly because these were great employees with families. What were they going to do? I’d worry myself sick over that. I developed what felt like an ulcer. That was never verified by a doctor but the stomach pains from worry was very real.

I knew I had to get sales up but the local economy was down. I didn’t have extra money to throw at advertising so I had to get creative. I went on a long search to find business owners who was doing or had done what I was doing…and that was increasing sales without spending advertising dollars.

Over time, I uncovered, stole, and implemented ideas. I discovered that increasing revenue was all about marketing, not advertising.

Advertising in a local community was all about making an announcement about some special or a price reduction on products hoping that if you threw it in front of enough people, you’d find several who were interested and they’d come buy. But that means you’re only guessing. You’re trying to guess what they may want or like. That is a losing game. I discovered it’s lazy and very dumb to do. That’s what advertising is.

With advertising, there is little incentive to buy something. The ONLY incentive is the price is reduced for a limited time. If you don’t buy before the deadline, you’ll pay full price for it in a few days. As a retailer, the idea is to put something on sale thinking that while the customer is in the store, they’ll buy other stuff that is not on sale and therein lies your money making. Again, it’s a game of hope because the items on sale are just a guess. You never know if the customer will want something you’re putting on sale. You have a good idea if they do, but you never really know.

When we’d put out flyers with on-sale merchandise, we knew weeks ahead of time what would be on the flyer and we build up inventory accordingly. More often than not, we were stuck with inventory of items that didn’t sell well. Sometimes we’d guess so badly we’d be out of occasional items the first day of the sale and piss off the people who came in for the sale item only to find we were now out and it’d be at least a week (or never) when we’d get it back in.

And the cycle repeats itself, month after month and year after year. It’s easy to get lost in that cycle because being in business is a lot of busy work. You have a lot to pay attention to and when you advertise, you kind of acknowledge to yourself that you put in the effort and it’s done until the next couple of weeks when you do it again or when it occurs to you, “Hey, I need to advertise again, it’s been awhile.” That’s because there’s no marketing plan established for consistency.

As you can see, a lot of things get in the way while running a business. Customers, inventory, OSHA, workmen’s comp, employee issues, profit margins, theft, media salespeople, and more create so much busy work, it’s easy to not pay attention to the machine that’s bringing home the bacon. Then it later occurs to you that you need to advertise so you throw something together.

This is why advertising will slowly make you go broke. You need a system. You need something you can implement that is on auto-pilot that incentivizes customers to spend more.

There are three ways to grow a business. Get more new customers. Get customers spending more than usual when they buy. And get customers buying more often. That’s how a business grows. A business doesn’t grow by grueling over customers, inventory, OSHA, workmen’s comp, employee issues, profit margins, theft, media salespeople, and whatever else. That’s why you need a system. Put something in place that works while you’re paying attention to other stuff that can’t be ignored. And have a marketing plan with a schedule and be consistent with doing what your plan says to do when it says to do it.

So what is an example of what you can do that is self-working?

One of the things we did was implement a frequent buyer program before frequent buyer programs were cool. I structured it in a way that the customers could care less if something was on sale. In fact, if they bought something that wasn’t on sale, that was better for them because they got rewarded for it. If they bought something on sale, they did not receive any advantage for the frequent buyer program. It was genius, brilliant, and worked great.

When other businesses in town were screaming for help or closing, our average sale increased 23%. Our advertising budget was half or less than normal because we were investing ad dollars into the customer and not the advertising mediums like the newspaper, TV, or radio. It turns out that investing ad dollars in the customer is WAY cheaper and far more effective than just plain ol’ advertising.

So there you have it. This is the argument for stopping advertising and instead, get busy marketing or get busy dying. Advertising is a slow death for a business unless you’re one of those multi-million dollar companies with millions and millions to spend. Most small businesses aren’t like that and those that aren’t must think differently nowadays. After all, small businesses are up against Walmart and Amazon. They are the obvious 800 lb gorillas in the room. They are a threat against retailers, dentists, auto repair, optometrists, auto sellers, and more.

How can that be, you ask? Walmart didn’t start out selling groceries but they do now and have for years. Amazon sells groceries now too when they only first started out selling books. Walmart sells eye glasses at numerous locations when they never did. Amazon is probably planning out ways to do this.

Not long ago, I was consulting with the wife of a dentist. I reminded her how Walmart was steadily moving into niche after niche. She confided in me that Walmart had started offering dentistry services. She said her husband was one that was asked to be part of the Walmart experience. I was shocked but not surprised. It’s my prediction that you will soon be able to get a divorce at Walmart because they’ll have legal services. Amazon will be looking for ways to do this too.

It’s not just Amazon and Walmart that are a problem. Thanks to the internet, anyone can get into the selling game. A year ago I spoke with a lady who used to sell a ton of yarn products from her brick and mortar store. She complained that the faucet of sales was nearly turned off because there was a website that sold only yarn. She said, “You can get any color or style you want. They sell it cheaper than me and it will ship to the customer in just a few days.”

Obviously, things are a changin’. Advertising is not going to solve the problems. Marketing is the answer. Smart marketing.

Stop advertising and get busy marketing or get busy dying.