Dealing with Limited Financial Resources: A Marketing Challenge for Small Business

Abstract

DEALING WITH LIMITED FINANCIAL RESOURCES: A MARKETING CHALLENGE FOR SMALL BUSINESS A broadening topic of research is enhancement of marketing practices within small business firms. One focus of this research has been small business owners' experiences with marketing under tight financial constraints. Such research is critical because small businesses often operate on a financial razor's edge, and a minor miscalculation in revenues or expenses could be fatal. A number of previous writers have emphasized that small firms, unlike larger businesses, have limited funds for marketing (Buskirk 1987, Davis 1985, Goldstein 1984, Hills 1987, Mehra 1982, Sheth 1987, Morganosky 1988, Stasch 1987, Weinrauch 1987, and Wortman 1987). As a result, small business owners should seek creative, low-cost ways to market their products and services, to identify the problems caused by limited financial resources, and to seek help dealing with such problems. Low-cost marketing is a relative and nebulous concept. What might be affordable for one company may not be for another. Nevertheless, two previous articles by Weinrauch (1987) provide some basis for discussion. They state that low-cost marketing may be explained as strategies that cost little in terms of actual dollars spent, consist of a very small percentage of the total budget, or cost-effectively enhance sales revenue. Intuitively, small business researchers know that small businesses are quite innovative in adopting approaches. This perception is sometimes highlighted in the popular business literature. Many shoestring approaches are reported in the form of business vignettes, anecdotal stories, or occasional case studies. Moreover, some recent books dramatize marketing techniques for bootstrapping the small business (Davidson 1988, Weinrauch 1989). However, empirical studies that record small business owners' experiences, perceptions, and levels of success related to marketing practices are lacking in the literature. PURPOSE This article highlights the results of an exploratory study to identify small business owners' attitudes and perceptions concerning dealing with a limited marketing budget. Specifically, the purpose was to: * identify small business owners' attitudes concerning their ability to compete with larger businesses; * examine the owners' attitudes about the importance that marketing plays within their small businesses; * identify selected strategic marketing areas that are posing problems for the small business owners; * determine the most popular sources of marketing assistance used by owners; and * determine if any significant correlations exist between the owners' attitudes, problems, marketing assistance used, and various traditional success measures. All of these objectives are tied to the major issue of limited financial resources, and results should have some interesting implications for both educators and practitioners. From a theoretical perspective, the findings should also generate interest in previously overlooked research areas. For instance, how significant are limited finances in competing with large companies? Do small business owners feel that educators and government officials are paying enough attention to developing and communicating effective small business marketing strategies? What type of marketing-related problems prevail when finances are constrained? Do small business owners diligently seek assistance to overcome budgetary constraints? Such research could help the multitude of small businesses with shallow pockets to more effectively use their limited resources. METHODOLOGY The survey instrument was pre-tested on a group of 25 small business owners, and ambiguous questions were deleted or reworded for clarity. …

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