Consumers are a lot like fish in a pond full of marketing agency sharks. They sell us products and we hand them all of our money. However, now that the average American is running low on cash, more and more marketing agencies are getting an appetite for small businesses. Major corporations and retailers have flooded the market with products advertised to help businesses succeed in the digital age and in doing so, they’ve made growing a startup more dangerous than ever.
Business-to-business marketing, or B2B for short, isn’t a new fad. Marketing agencies have been using slick acronyms to sell an “image” to start-ups ever since the Internet market took off in the late ‘90s. However, the number of B2B agencies has skyrocketed in the last few years due to two historic events – the economic collapse of 2008 and the rise of social media thereafter.
Last year, consumer credit card use bottomed out as more and more people lost faith in Wall Street, the foreclosure-ridden real estate market and high unemployment rates. At the same time, Twitter, Facebook and Groupon were 3 of the biggest social media trailblazers, leading the charge into a multibillion-dollar industry, which spawned a legion of tech start-ups looking to get a piece of one of the few remaining profitable economic pies.
All of this has led to a new era as start-ups have taken off during the economic downturn. Nobody likes spending money, but everyone wants to start a business – and every business wants a social media presence. As you can probably guess, marketing agencies are happy to oblige. Personalized news agencies like Xydo and Summify (which was recently acquired by Twitter) have small businesses beating down their doors with stacks of cash in their hands. Google “B2B” today and you’ll discover insider tips, public forums on how to improve your strategy, guides to social media sites like Pinterest and more.
At the same time, the credit industry is taking advantage of the unregulated commercial market and issuing business credit cards to anyone who wants one. The credit industry is playing the part of an “angel investor” (although one who charges a ridiculously high APR). Credit companies aren’t the only ones trying to lend money to businesses, either. Though Wall Street is hesitant to finance anything – due to a backlog of robo-signed mortgages and all the government probes – there are numerous lenders with business models geared towards start-ups, like purchase order financiers and micro-lending companies.
If you’re trying to get your start-up off the ground these days, you need to be careful. There are hundreds of companies out there that would love your business, but only if you’re buying. On top of that, there are dozens of card issuers who will be happy to give you their version of a bank loan when you can’t find traditional financing. Don’t let the sirens lead you astray. Concentrate on bootstrapping your company until it’s profitable. Sell more than you buy, buy as little as possible, and never enlist the help of a marketing agency until your margins are good enough. The pond may be bigger these days, but it’s riddled with sharks.