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5 Mobile Marketing Trends You Can't Afford to Miss

Posted: 21 Feb 2020 01:55 PM PST

With over 80% of people using a mobile device to search the internet, optimizing your business for mobile search and customer acquisition has never been more important.

In 2019 alone, mobile search advertising spending eclipsed $28 billion, a number that accounts for approximately 72% of all digital ad spend.

Many of us remember the 2015 "Mobilegeddon" occurrence, which became known as the Google mandate that mobile-responsiveness be a component of rank factoring regarding search results, most companies that scrambled to create a mobile-friendly site are still doing mobile wrong.

Screen resolution and design ratios considered, there is still a significant opportunity to improve mobile marketing consider the chunk of advertising dollars spent in this area.

As we move through 2020, here are a few areas of your mobile marketing strategy to consider enhancing.

Bolster security

With e-commerce fraud attacks increasing year-over-year, consumer apprehension toward mobile purchases remains a real issue that businesses face. Just in 2017, Experian reported that e-commerce fraud grew nearly twice as fast as e-commerce sales. With these facts in mind, companies must consider customer safety and improve mobile cybersecurity if they want to keep and improve consumer trust. Every business that processes customer data or online transactions should have the following measures in place.

Secure Sockets Layer encryption (also known as SSL)

SSL helps your site maintain a high level of privacy by encrypting the data transmitted across your pages. Websites with SSL encryption make it nearly impossible for hackers to intercept data by ensuring an authentication process to confirm that devices that are communicating with one another are who they claim to be. By verifying this information, you can ensure that your customer data is secure before reaching the intended recipient. Obtaining a valid SSL certificate is not difficult; there are hosting sites that offer free SSL encryption, which gives businesses needed security without added costs.

Multifactor authentication

Multifactor authentication requires two or more independent credentials to create a layer of defense and make it more challenging for unauthorized individuals to gain access to a target such as a digital device, database or network. An example of this is requiring customers to provide a password and an additional credential, such as a one-time code that your website's authentication server sends to the customer's email address or phone. The customer can then only gain access to the website's data by providing both of these credentials.

Fraud detection tools (card verification value, fraud scoring, and address verification)

Several companies offer patented fraud prevention technology to improve both user experience and security. Installing data tools that combine business intelligence tools, machine learning and web-based investigations to track counterfeit payments, as well as account fraud, can help secure customer transactions. By implementing a fraud detection tool, you can reduce chargebacks, mobile fraud manually reviewed orders, and ultimately increase sales.   

Consider ad blockers

Seventy percent of people dislike mobile ads. This presents a problem considering marketers and advertisers are now spending over half of their budget on mobile advertising.

It is estimated that a total of 380 million mobile devices are using ad-blocking technology to prevent advertisers from sharing their message. While the benefits of mobile advertising are clear, the advancement of ad-block technology on mobile devices is creating a challenging arena for advertisers.

To combat the effects of this trend, aim to improve advertorial quality and audience targeting. Doing this will ensure that the right people see your advertisement. In our consultancy, we've begun reaching out to our customer base to survey on the most significant challenges their businesses are facing. We then create ads with content providing solutions to those problems, ensuring that the material offers insight and value to the viewer. The right message, to the right audience, at the right time, is the key to higher click-through rates (CTRs) on your ads and stronger conversions.

Be sure to listen to your audience. Embrace comments and feedback for improvement to provide valuable content in your advertorial, which will help gain consumer trust towards your brand.

Leverage video

Mobile users are engaging with video content daily and businesses are taking notice. 81 percent of marketers are optimizing social videos for viewership on mobile devices. Cisco forecasts that in 2021, over 75% of mobile data traffic will come from videos. Want to leverage the power of video for your mobile users? Here are a few principles to remember when creating video content:

Provide value while keeping call to actions in mind.

73 percent of consumers affirm that the social media presence of a brand has been influential when making a purchasing decision. At the same time, 84% of consumers claim to have purchased a product or service after watching a video. Capturing the perfect balance of engagement by integrating entertaining, informative and persuasive content can give you the sales boost you need and improve top-line revenue.

Add subtitles.

Did you know that 85% of Facebook videos are watched on mute? Adding captions to your videos may be one of the most effortless enhancements you make to your mobile marketing strategy. As most people who are watching videos on their phone are on the go, ensuring that you provide features that enhance the user experience for your audience using mobile devices is very important.

Keep videos concise and engaging.

Capturing viewership and visitor attention has never been easy and with more distractions due to mobile devices, this has become even more challenging.

In 2016, Facebook analyzed its users' video consumption data and discovered that 45% of people who stay tuned in to a video for the first three seconds would continue watching for at least 30 seconds.

Think of your video as a pitch to potential investors or a live presentation intended to close a sale; it must be interesting enough to garner attention, yet concise enough to inform while keeping your viewers engaged thoroughly.

Develop apps

Let's be very clear when considering this strategy: Businesses shouldn't run out to build a mobile application unless there is a distinct opportunity to provide more value and enhance the overall customer experience.

Companies that tend to perform well with mobile apps include consulting firms, restaurants, health, and fitness organizations, along with SaaS companies. Businesses that integrate mobile applications into their marketing strategy understand that using this channel gives them the opportunity to:

  • Increase top-line revenue
  • Improve ease-of-use for the customer
  • Increase consumer loyalty and engagement toward the brand

In 2020, gross revenue across the mobile app industry will exceed $189 billion.

While many consumers still prefer to make purchases in-store and on websites, 25% of companies report that a mobile application is currently a channel they are using to generate sales.

Embrace augmented reality

The global market for augmented reality will grow by nearly $77 billion from 2020 to 2024.

Unlike virtual reality, which is a simulated experience of the real world, AR is the scientific phenomenon of superimposing digitally generated images into the user's view of the real world, producing a composite view.

Large retailers such as Lowe's have looked to leverage the technology by allowing customers to see what Lowe's products would look like in their homes by using their consumer app. By simply clicking the option to "view in your space," consumers can see grills, patio furniture and large plants as they would appear in their living space.

Warby Parker, a company that sells prescription eyeglasses, is also getting in on the fun by combining AR with face mapping to allow customers to try on virtual glasses from the convenience of their mobile devices.

Will the addition of a mobile application add more value to your consumers and help your company generate more sales? That question should be answered before you decide to develop your own app, but the numbers have proven that the right companies that are integrating this element into their marketing strategy are generating more revenue as a result.

Given the evolution of advertising platforms and consumers highly favoring mobile usage, optimizing your marketing strategy will give you an edge in reaching your target customers. Consider increasing security, fine-tuning your marketing message, and integrating engaging videos and innovative tools like mobile apps and leveraging augmented reality are a few ways to stay ahead of the marketing trends in mobile.

Why Your Brand Needs to Start A Podcast

Posted: 21 Feb 2020 01:08 PM PST

Let's be real, podcasting has been around for a while now. In 2004, Apple removed the barriers for audio content producers, allowing them to create and share their own radio-like talk show with the world. You no longer needed to be on the radio to have your voice heard. All you needed was a microphone, recording software on your computer and an RSS feed.  Although there have been podcasts on our smartphones since the first Anchorman movie was released (yeah, it's been that long...), it hasn't been until the past two or three years that podcasting has become a widely consumed content medium. And now, there are more new listeners subscribing to podcasts than ever before.

Your potential listeners

"The Canadian Podcast Listener," a landscape study conducted by Audience Insights Inc. and Ulster Media, with support from The Globe and Mail, shares the podcast listening habits of 4,000 Canadians. The study found that nearly 10 million Canadian adults have listened to a podcast in the last year, and that number is growing. More than 70% of listeners started listening to podcasts in the last three years, with 41% starting in the last year alone. 

A passive medium

Podcasts are a passive medium, which means you don't have to have your phone in your hand or be sitting in front of a screen in order to consume it. It makes it incredibly easy for listeners to consume content when they are completing other tasks. They can listen on their commute to work, on their morning run, or cleaning the house. "The Canadian Podcast Listener" explains that there are three reasons behind why listeners tune into their favorite podcasts.

  1. To be entertained

  2. To hear interesting stories 

  3. To learn something new

Podcasts allow listeners to learn something new, become inspired, listen to a story and even catch up on their celebrity gossip while doing the most boring tasks during their day. If you're cleaning the bathroom, you might as well listen to your favorite comedy podcast. If you're stuck in rush-hour traffic, you might as well listen to your favorite business strategy podcast. If it's cardio day at the gym, might as well catch up on your favorite celebrity gossip podcast. It's just so dang easy! 

Starting your podcast

OK, so now you've decided that you're going to start your very own podcast for your brand. Where do you start? Although it may seem daunting at first thought, once you have a process in place you'll be well on your way to having your very own live podcast for the world to listen to! Here are a few tips to get you started.

1. Pick your topic and episode format

The first step is to determine what you are going to talk about! If you are a brand looking to launch a podcast, ensure that it provides consistent value to your listener. Your podcast shouldn't be a constant sales pitch. If you're a landscaping company, maybe you talk about tips and tricks to keep your garden free of weeds, or new trends in patio furniture. Ultimately, you are wanting to be a thought leader and prove to your listeners that you are a reliable, knowledgable brand that they can trust! 

The other thing to keep in mind is how you are going to format your episodes. When you start off the episode are you going to have a "quick tip of the day" or a catchy intro song? Is it going to be an interview podcast where you bring in clients or colleagues to talk about their stories and advice? If you are looking for sponsorships, where are you going to place the ads? This structure should also remain consistent. You want your listeners to be comfortable listening to your podcast, not being caught off guard.

2. Determine your publishing schedule

When are you going to post your episodes? Weekly? Monthly? Every weekday? Whatever your schedule is, make sure you are able to remain consistent in the release of your content. Listeners look forward to your content, so make sure that the release of new episodes is predictable. 

Pro Tip: Batch record your episodes! If you are able to record multiple episodes in one sitting, do it!  It makes the process much easier for you! Record 4 episodes, edit 4 episodes, schedule 4 episodes, BOOM! You have a month's worth of weekly content! 

3. Choose Your Equipment

Building your podcast "studio" can be as simple as using your iPhone to record your episode. However, investing in a small, mobile recording rig can make a huge difference in the quality of the audio that you record for your listeners. Here is the set up that I use to record our podcast The At Heart Branding Podcast with Bryton Udy.  

4. Record, edit, publish

Now that you have your gear, topic, format and schedule, you are ready to start recording, editing, and then share your podcast with the world! There are plenty of podcasting hosting sites that help you distribute your podcast onto multiple podcasting services, such as Apple Podcasts, Stitcher, Google Podcasts, and Spotify. Another one is Audioboom. Audioboom allows you to upload, schedule and publish podcasts across the most popular podcasting platforms, and also gives you valuable analytics into the listenership of your podcast. The mobile app also allows you to record right from your phone and upload it right to your podcast. It doesn't get easier than that! 

Ready to record?

Podcasting is a very exciting opportunity for businesses to share their expertise, knowledge and build relationships with potential customers. Becoming a thought leader and a source of inspiration for your listeners can lead to loyal listeners and customers. It may seem daunting to get started, but it doesn't have to be! Happy Podcasting! 

3 Steps to Developing Your Brand Voice

Posted: 21 Feb 2020 12:46 PM PST

When you hear "brand voice," what images come to mind? If you think of your favorite products, services, experiences, how does their brand associate with your happiness in using those products or services? Are you able to put your finger on how those companies communicate to you? Is it a feeling of belonging to that tribe? Do they tap into your core values as a person?

These are all questions brands take into consideration when defining who they are as a firm, what their products represent to their customers, and how to communicate that value to cut through the noise. In this article, I will show you how to create a brand voice in a few simple steps, including actionable ways to effectively communicate that message to your target customers to drive engagement.  

First and foremost, if you want customers to connect with your brand, then you need to understand who you are as an organization before you can connect with customers beyond a transactional level.  

Step 1: Define your vision, mission and core values.

Vision: This is a statement that defines the ideal future state of the organization. 

Mission: Provides a short explanation of why the organization exists and its intentions.     

Values: These are the core principles that guide the organization and its culture. 

An organization can not effectively communicate its brand if it has not defined who it is. These ingredients sit at the core of developing a brand as well as a company culture, which is also an internal representation of the organization's brand. 

First, let's look to define the vision or ideal future state or mental image of the company. Think aspirationally; this can be used to inspire employees, attract employees as well as customers who share this vision.  

Can you answer these questions about your organization? 

  • What are the problems we are seeking to solve? 
  • In 10-15 years from now, what does this organization look like? 

Example: "To become the world's most loved, most flown, and most profitable airline." - Southwest Air 

How can you adopt this framework for your business? 

Next, we jump into the mission of the organization – the purpose or what the organization intends to do. The mission statement helps guide employees and supports the overarching goal of the vision. 

Can you answer these questions for your organization? 

  • Why does this organization exist today? 
  • Why does it do what it does? 

Example: "Southwest is dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit. 

Finally, we jump into values, an organization's core values become the moral compass of the organization, they can use as the barometer in which to hire, fire, engage in partnerships by as well as build a passionate customer base. 

Ask these questions of your organization:

  • What values should guide employee conduct for the organization? 
  • What values best represent the intentions and ethos the company upholds? 
  • What values are shared as core traits among your top employees that resonate with customers? 

Some firms may have several values some may have a few but the organizations that create impact, derive a thriving culture and attract passionate customers make their Values actionable and not just a plaque that hangs on a wall.   

Example: Southwest 

Live the Southwest Way

Warrior spirit

Servant's heart

Fun-luving attitude

Work the Southwest Way

Safety and reliability

Friendly customer service

Low costs

Creating the organization's vision, mission, and values should be an inclusive exercise and not just for the C-suite. There should be stakeholders involved across all aspects of the company from front line employees dealing with customers to managers and executives. Every group brings a unique lens to company culture as well as customer engagement. If this is your first go-round or if you are starting a new business, try keeping it simple and start with a few core values that are actionable and not a list of 20 that become impossible to live by daily. 

Step 2: Craft the brand voice.

Once you have your company identity firmly intact, it is now time to being crafting your brand voice or the personality of your company. The brand voice will be an outward projection of the organization's vision, mission and values, and will comprise of many communication techniques. That is why getting the foundation in place allows your organization a reference point, a strategic personality roadmap if you will, that guides how you communicate, why you communicate and to whom you are communicating with. This then translates into where you communicate with your customers, or stakeholders, and the tone in which you communicate with.

Think about the instances where there is the highest frequency of customer interaction with your organization, it could be via social media, over the phone or in-person, every organization differs. These high-frequency interactions are excellent places first to gain a deeper understanding of why they buy your products or services, a place to understand the core value of the customer, and what your product helps them achieve.       

A simple tool organizations use to help craft their brand voice is a brand voice template. This template can serve a tool for your content creators, your marketing department as well as anyone who is directly dealing with customers to articulate the voice of the organization. On the left side, we start with the voice characteristic (which can be derived from your core values), next you can describe that trait, so it is fleshed out a bit. After that, you can use an example of what is acceptable and what is not acceptable per company standards and policy. This message formation roadmap allows individuals to insert the brand voice into their daily actions, whether a customer service representative over the phone, a salesperson in the field or an advertising campaign being conducted by marketing. The common message framework and examples bring brand consistency, clarity, and allow customers to adopt and engage. 

Step 3: Look beyond profits.

In today's business, climate companies are tapping into consumers' core values with their messaging and actions; the conscious consumerism trend has become a reality for many brands, and for those that do not find their authentic voice, they will fall by the wayside. Companies are seeing market trends for responsible brands gaining deep traction in verticals where customers are not shopping on price but lifestyle, shared ethos, and story.

Consumers are willing to pay a premium for products that support their identity, like organic fair trade coffee producers or products made from recycled plastics or mobile banking, to help the world's most vulnerable. These products and services are all derived from firms that align internal Mission with stakeholder interest as well as social or environmental interests.

In the U.S., there has been an uptick in the number of benefit corporations or B corporations. B corps are a legal formation for long term value creation and mission alignment. The legal framework of governing the organization protects the vision, mission, and core values through capital raises, partnership endeavors, and liquidity options. Your organization does not have to become a B corp or nonprofit to be socially responsible; there are plenty of ways to run a double or triple bottom line business that not only provides returns to shareholders but returns to all stakeholders, like employees self-worth, customer wellbeing, community involvement or the planet.  We have entered the era of stakeholder capitalism, and the old guard of profits at any cost is over, how can you tailor your brand voice to be authentic, align with your mission and support your community?     

Should Your Small Business Bank Online?

Posted: 21 Feb 2020 05:45 AM PST

  • Though online-only banks can be traced back to 1989, the services we know today started in 1995.
  • Online-only banks offer convenience, giving business owners the ability to access a bank account on a mobile device or computer. They also charge zero to low fees and have strong security measures.
  • While online banks can be great solution for many small businesses, cash-heavy ventures may want to stick to traditional banks for the time being.

When it comes to banking, there are certain images and concepts that immediately come to mind. Account fees, long lines, filling out deposit or withdrawal forms, and having to drive to a physical location to access your hard-earned money. Such was the state of banking for generations, but recent years have ushered in a new kind of banking that leverages the internet, computers and the smartphones that have taken up residence in nearly everyone's pockets – online banking.

Not to be confused with the online versions that most legacy banks offer, online banks or digital-only banks eschew the traditional bank location for a financial institution that exists solely on the internet. Spurred on by the popularity of banking outfits like Simple, Ally and Chime, digital-only banking has branched out from individual checking accounts into other products like investments, savings accounts and loans.

Digital-only banking has grown so much in the last decade that the business world has also begun to adopt the technology. There are some things to consider as a small business owner before deciding whether now is the right time to open a business checking account that you can access 24 hours a day on your phone.

What is business online banking?

Online business banking offers many of the same services as traditional business banking, such as a business checking account, but the banks' operations are entirely online. You apply for an account on the banks' website and, once your account is approved, access it via web browser or mobile app.

What features does online banking provide?

The concept of online banking in nothing new. For years now, most traditional banks have offered an online component for users to easily access their account balances, transfer funds between accounts, accept direct deposit and pay bills online. But these features usually came with the expectation that you would step into a physical branch at some point. Regardless of the online functionality, the physical bank locations were still the top of a user's interaction with the bank, and bank officials usually saw those interactions as a time to upsell customers on items like additional lines of credit.

Digital-only banking doesn't come with that expectation. Since there are no physical branches, transactions can be conducted at the speed of the internet. Without the overhead of owning and operating a physical branch, online-only banking customers often don't have to deal with additional fees. In fact, many online-only banks have eliminated banking fees, including overdraft fees, monthly maintenance fees and transaction fees in some cases. Online business checking accounts are regularly provided with a business debit card without any hint of a monthly fee.

"There's a different value proposition when you're talking about the differences between someone who wants to interact face to face with a banker and needs explanations ... but I think that today the nature of small business is changing so much and entrepreneurs are younger and more tech savvy," said Bryan Crumpler, chief operating officer at online bank Azlo. "The education and rise of other digital platforms have made it a lot easier to describe to folks what banking really is, and because we are 100% free, there's really nothing to hide or have to explain."

Without needing to pass on a branch's costs to its customers, online-only banks' savings accounts also have higher interest rates. The highest rates in online-only banks reach 2% annual percentage yield (APY), which completely overshadows the national average APY of 0.10%. As for checking accounts, most online banks don't require a minimum balance to start one, though they usually require some sort of initial deposit.

Along with the convenience of online-only banking, most companies have deals with existing ATM networks, so physical cash is still easy to obtain. For example, Simple customers have access to approximately 40,000 free ATMs in the Allpoint network.

How safe is online-only banking?

One of the long-held notions about traditional banking is that it's one of the safest ways to manage your business and its payments. Banks immediately conjure up images of massive vaults of cash behind impregnable steel doors requiring multiple passcodes and combinations to gain entry. However, that's not really the case. Most regular banks only have enough cash on hand to supplement their daily operations. Most of the money goes to either a larger city bank or a federal reserve depository. Cash deposited to a physical bank is insured by the Federal Deposit Insurance Corporation (FDIC).

Online-only banks deal in digital transactions, so along with being insured by the FDIC in most cases, they have some of the toughest digital countermeasures available. When searching for a potential online bank, be sure to look for a company that utilizes encryption protocols and fraud monitoring.

"The type of security that's in place for an online-only bank is really the same for any other bank in which you can facilitate your transactions online," Crumpler said. "Other than cash deposits or cash withdrawals, most people are sending payments via ACH or some other wire transfer system, so for me, it's the exact same."

How does online-only banking work for entrepreneurs and SMB owners?

Within the last decade, online banking has become more accessible to entrepreneurs and small business owners looking to take their brands online. Online business banking can easily trace its steps back to the advent of eBay, which helped usher in the concept of the average person selling goods on the internet.

In recent years, companies like Square, Clover and PayPal have made it easier for online businesses to move their operations into the real world, especially with point-of-sale systems that can be used anywhere. Whether you do business solely online or in the public space, those companies can further digitize business transactions.

For Michelle Marcella-Morales, owner of Raw Opal, her personal use of digital-only banking combined with her need for something like the Square POS system has led her to take her business finances entirely online.

"I was already banking 100% online personally and had every confidence that I could easily handle all of my business finances in the same manner," she said. "I handle my business online, locally and in a remote-physical way as well. Square allows me to track all of my online sales and local business while also keeping it easy for me to handle private sales when I am at an event."

As a Square banking user, Marcella-Morales says her transactions are all quick to complete, and with the company's online features, she can easily track revenues and expenses, which is imperative during tax season.

That sort of easy trackability is by design, Crumpler said, since "banking has become so commoditized that everybody kind of gets it. For the businesses that are looking to segregate their finances between their consumer lives and small business lives for tax or bookkeeping purposes, we offer a seamless experience that's usually quick to get done. I don't think the high-touch, intensive explanation of retail banking is necessary anymore."

If your company deals in massive physical transactions or needs to deposit large amounts of cash, however, Crumpler admits that "you might be better off with a retail branch."

The downsides of online-only banking

While the simplification and easy use of an online-only bank can be alluring to an entrepreneur, those features tend to come with some major caveats that may not exist for your average personal banking user.

Perhaps the most obvious downside to online-only banking is the inability to speak with someone face to face. While that may be a positive thing for some, many business owners seek guidance from financial professionals at traditional banks. Speaking to the right expert can guide your business in a way that makes growth – and success – more attainable.

As a business owner, you also will likely need more from your bank than just a checking or savings account. There may come a time when you need a loan or line of credit to pay for more stock or some sort of upgrade. Unlike retail banks, which can handle that need easily if you meet their prerequisites, online-only banks don't usually offer loans.

"[Square's] business line of credit is [offered] with a responsible amount of interest, and they make short-term repayment a breeze [by] giving many options," Marcella-Morales said. "I could opt to take a business loan to bolster my on-hand inventory and then either pay it off in small sums, large payments or a mixture of either paired with 5% off every transaction. It makes paying a loan back quick and seamless."

As Crumpler mentioned, another major hurdle for online-only business banking crops up when a business deals in cash. While it's easy to deposit checks, and some online banks have processes in place to help deposit cash, it's rarely as simple as taking that cash to a physical bank. While small cash transactions may be doable, it's exponentially harder for an online-only bank to deal with high-volume cash deposits.

"I have to get slightly crafty with depositing large sums of cash," Marcella-Morales said. "If I do an event where many folks pay in cash, I do find that to be a bit of an annoyance. Most of the time folks pay with a card, but in the rare times I get cash, it can be a hassle."

Your business's future bank could be online

Whether you're a small business just starting out or a midsize operation looking to streamline your banking processes, online business banking could be a major boon to help with your success. With some careful consideration on your end, weighing your wants and needs, you can decide for yourself whether an online bank is right for you.

Capital vs. Operating Grants: Which Does Your Business Need?

Posted: 21 Feb 2020 05:10 AM PST

Getting funding to run your business is difficult no matter what kind of organization you run. Grants, which are sums of money given to an individual or organization by the government, can help, but they are often difficult to qualify for and win because they're in high demand. There are many types of grants for businesses, but the two most commonly applied for are operating and capital grants. Read on to learn their differences, the pros and cons of each grant type, and tips to help you decide which grant is right for your business.

What is an operating grant?

An operating grant, also known as an unrestricted grant, is a working capital fund given to a nonprofit organization to support its general mission and pay for overhead expenses, such as rent, salaries, furniture and other day-to-day costs of running a business. Operating grants are extremely sought after thanks to their unrestricted nature; organizations are free to use the funds as they see fit.

Because operating grants are so popular, and because the money can be used however the company likes, the application process is rigorous and competitive. Your organization must prove an impeccable track record, demonstrate strong and responsible leadership, and provide a clear, outlined plan of how your organization will use the money.

"Generally, operating grants are given to businesses and organizations that have a strong impact in their field," said Chad Hill, CMO of Hill & Ponton, a firm of disability attorneys for veterans. 

 

Editor's note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

 

How to apply for an operating grant

Because most operating grants come from individual donors, there is no one standard way to apply. Each donor has its own applications and requirements, and not every business is eligible to apply. Some organizations offer an online application, but the application process for grants is so complex that it often requires professional assistance; many organizations hire professional grant proposal writers.

Grants.gov offers information on grants and a handy search tool for finding a grant program that suits your mission. The Catalog of Federal Domestic Assistance (CFDA) is another resource you can use to find available grants, programs, and information about the nonprofit organizations and agencies sponsoring them. [Read related article: Top Small Business Grants of 2020]

Pros and cons of operating grants

Because operating grants are essentially a gift from the government and you won't have to repay the money, they can give a serious boost to your business. However, because the money comes from the government, grant recipients are subject to strict compliance measures.

Pros of operating grants

With the gift of an operating grant, businesses have the opportunity to build a stronger, more sustainable infrastructure that will allow them to carry on their missions. Grants also give businesses an opportunity to build trust and credibility for their organization. Because general operating grants are so competitive, receiving one is often very prestigious and brings the organization attention from other donors or revenue sources. This attention also gives the organization opportunities to prove it uses good business practices and can live up to expectations.

Cons of operating grants

The success of operating grants can be difficult to track and measure because the use of the funds is up to the discretion of the business itself. Still, there are many strict compliance and reporting measures in place to ensure the money is being well spent. The receiving organization must submit detailed reports on how the money is used, document any accomplishments or failures, and continue to report throughout the grant period if the money is given in stages. This can be time-consuming and stressful for the organization.

Many organizations fall into the trap of relying too much on operational grants to fund their overhead costs and find themselves at a loss if or when they lose the grant. If you receive a grant, it's important to have a strategic plan and operating budget in place that details how you will cover your project costs without the grant.

What is a capital grant?

A capital grant is a finite, time-limited grant with specific objectives. Capital grants, also known as capital funds, are generally granted for the express purpose of gaining capital. Here are some examples of this capital:

  • Equipment, furniture and other major material purchases
  • Renovation, refurbishment or restoration
  • Construction of a building or new facility
  • Land purchases
  • Historic preservation

Capital grants are often part of a larger, phased capital campaign, so you should not rely on a capital grant to fund all of your capital needs.

"A capital grant will provide a short-term fund for a long-term need," said Jared Weitz, CEO and founder of United Capital Source. "Capital grants are widely advantageous for businesses looking to acquire materials or tangible assets."

How to apply for a capital grant

Like the application process for operational grants, the process of applying for a capital grant has no single method or specific set of eligibility criteria. Most grants are given by individual donors, the government or independent agencies, and each has its own application process. Be prepared with your business plan, financial statements, and credit report as well as any support documents the specific application requires.

Again, you can visit Grants.gov or the CFDA to look for applicable grants, and hiring a professional grant writer is often helpful to capital grant program applicants.

Pros and cons of capital grants

Capital grants are a great way to purchase meaningful capital for your business without breaking the bank. However, you need to think carefully about how you will use your grant money and make sure you have a plan for getting further funding, as capital grants are not designed to stand alone in funding your business. [Read related article: What Government Loans Are Available to Entrepreneurs?]

Pros of capital grants

Because you do not need to pay the government back for a capital grant, it's a great way to build significant capital for your business without spending large amounts of your earnings.

As with operational grants, being awarded a capital grant is a highly competitive process and comes with a certain prestige, which will add credibility to your company and bring you to the attention of other potential donors and revenue streams.

Cons of capital grants

One of the biggest downsides to capital grants is how difficult it is to apply. The application is time-consuming, and applicants must meet a lot of highly specific eligibility criteria. You will also be subject to strict compliance and reporting measures to prove you are using the money effectively and honestly for a legitimate project.

Capital grants are finite – you get a certain amount of grant funds to complete a project and no more. This is why it is imperative to have a plan for how you will fund your capital purchases after the grant has run out.

How to decide which grant is right for you

Operational and capital grants serve two very different functions. Operational grants provide money for covering daily overhead costs, while capital grants provide money for capital purchases such as furniture or buildings. To decide which grant is right for you, you will need to look at what your business needs and determine whether you have the means to get the funding for it on your own.

The decision to apply for a grant is not one to take lightly, as it is a difficult and laborious process that may cost you money. Before you go to the time and expense of applying, you should be sure it will be well worth it for your organization.

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