A scenario to increase my cash flow problems

Originally Posted by Unregistered

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Question: What is the "Ad Media" or "Ad Product" you are selling ads in or on?

Comment: My experience has been that if this in an "Advertising" program...similar to placing ads on restaurant menus or Placemats... Advertisers will stop paying after they do not see a swarm of new customers coming to them as a result of your "Ad Program"....so a "monthly payment" won't work (my opinion)

Comment: "Factors" won't be interested in this unless you have an "AitTight Contract with a Clause that allows them to take the advertisers business if they don't make payments. Plus..."Factors" want, pretty much, a "Guaranteed Return"...or...they want a HUGE ROI...otherwise, why bother. These people are NOT "gamblers". They want "sure things"!

So...charge a "yearly or semi-yearly" fee and collect it in 3 payments;
1) 1/3 Deposit on Acceptance
2) 1/3 On Proof
3) 1/3 on Delivery

And...the prospects who told you to "See Me In The Spring"....forget 'em! IF you want to waste your time and visit them "In The Spring"...guess what they will tell you then? Yup. "See me after April 15"! After Tax Day they will tell you..."Whoops! We spent our entire Ad Budget! See me in the fall!" etc.

Don Alm

Hi Shane,

Thanks for asking about collecting payments for ads.

Don Alm has given you the best way of collecting on these advertising accounts but I have done one other way that worked on a monthly basis.

I collect one third down, one third on proof and the balance on start of promotion. BUT I have also done it this way. When a business bulks about that agreement I collect one third down and on approval of proof I make a monthly payment plan for the balance. If they pay off the second 1/3 by the time I am ready to print then I will print their ad and continue to collect the balance with monthly payments. That way if I get stuck for the last third I still sold the ad for 2/3's and I am happy. If they have not made payments to total 2/3's by the time I am ready to deliver, I place them in the NEXT printing.

So here is how this works out. If I am doing a town or zip code(s) every 6 months and I have 6 ads for each promo, I collect all the ad money from the ones that are willing to pay before printing the first promo. Let's say that is 3 of the businesses.

I then may have one or two that have paid 2/3's by the time of proof and the last one or two may have to go in the printing in 6 months from now.

Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing.

Worst case is I spend 15% of total which equals less then $1,500 and I will make a profit of $5,000 instead of $7,500. In hard to sell areas you some times have to discount the prices to sell the last few spots anyways.

This is just a neat way to make it look like you have given them an easy way to pay but you do not have to discount the ads to get their business. If all make the payments then you got full price for the promo, if not you will only take a small hit to your profits on the promo.

Best of success,

Skip Rosell

...are they legit?

In response:

I'll start with Don first.

Sounded like a lecture to me, Don...but I forgive you. I know you couldn't hold back giving the benefit of your experience and I appreciate your concern.

However...I, myself, have been in sales (generally as a top producer) for over 20 year, with thousands of sales calls under my belt, so I'm pretty confident in my ability to weed out the BS.

As I stated, I've already completed five campaigns but this is the first time I've gotten the excuse of, "my ad budget is already spent". And because of the touristy nature of the town and the fact that the tourist season is now over, this all leads me to believe that this it is a legitimate reason.

In addition, all of the other campaigns I've done have been for individual locations with ads selling for an average of four or five hundred dollars. Big difference when grouping six locations and asking for 1800 bucks. Rationally, they're getting a deal, but while 4 or 5 hundred might be easily absorbed, 1800 is harder to come up with...especially after the prime tourist season is already over.

In other words: I've been there, talked to them, gauged their response, and weighed the outcome.

As for restaurant placemats and the like: These are things I see as having little value to the advertiser and, for the cost, not worth the paper they're printed on. Not to disparage anyone who's thinking about or already doing this...it's just not something I could believe in and, because of that: sell.

I believe in value for value. And if my clients are spending their hard earned money on one of my ads, it had better bring in a justifiable return on that investment. I can honestly say that I can't think of a single better advertising vehicle, dollar for return, for those select client that I target, than what I offer. This is why I'm not terribly concerned about clients failing to make good on their payments. If the occasional client falls off, there are others waiting and willing to replace them.

Next, Bozo:

Thank you for you thoughtful response.

I only used Accounts Receivables Factors as an example to show that something similar is already being done.

A 20% annual return is low "compared" to what a Factor might get. However, it's quite high compared to what the average, and vast majority, of investors are getting.

I just thought that someone might have an idea that I hadn't thought of. Maybe something like those people who buy Land Contracts at a discount (just thought of that one). Anyway, my ads scenario is simply an investment vehicle much like the two above. And, if thought of in those terms, maybe an idea might start to percolate with someone that I could use.

On to Skip:

Thanks for responding, Skip. I'm pretty flexible about how I handle payment tailored to the client. But right now it's just a matter of me and my time.

What I want to do is to streamline the process so that when I start to hire salespeople they'll be able to go through an area quickly (especially touristy areas) no matter the obstacles (like off season). I don't think that short term payments do this. However, I'll keep it in mind for those times when it might come in handy.

Again, Thanks.

.....
"In addition, all of the other campaigns I've done have been for individual locations with ads selling for an average of four or five hundred dollars. Big difference when grouping six locations and asking for 1800 bucks. Rationally, they're getting a deal, but while 4 or 5 hundred might be easily absorbed, 1800 is harder to come up with...especially after the prime tourist season is already over."

and....

"I believe in value for value. And if my clients are spending their hard earned money on one of my ads, it had better bring in a justifiable return on that investment. I can honestly say that I can't think of a single better advertising vehicle, dollar for return, for those select client that I target, than what I offer."

Shane....now you've REALLY got my curiosity up. Would you mind sharing where your Ads are going to warrant...$400 or $500 and $1800 if grouped?

Thanks,
Don Alm

Sorry, Don. Not giving it away.

I've already got competitors out there, I don't need more.

However, I will say that it's something that has already been posted on this forum. It's just that I made a bit of an improvement over what everyone else is offering.

How do I know it's an improvement?...because I've replaced two similiar displays which were entrenched in the locations already. The location simply liked mine better.

The point for anyone reading this, is that anyone can create a business, just look around, read these forums, pick your target, and do it.

Which is not to say that it will work the first time. I tried a marketing concept out on oil change places, it showed them how by making incremental (small) increases in four seperate areas of their business, they would increase overall revenues by 30% or more. They all loved it! The problem (at least in Michigan) is that no could afford it (minimum $5000 to get started.)

Yes, I was dissapointed at the time, but then I tried something else and it struck a nerve.

Skip, you said....
"Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing."

Skip...what program is worth $1500 to advertisers? Or did you mention the $1500 just to give an example?

Nowadays....the most I can get on any "Ad" program is $595 from local businesses.

Thanks,
Don Alm

Originally Posted by Unregistered

Skip, you said....
"Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing."

Skip...what program is worth $1500 to advertisers? Or did you mention the $1500 just to give an example?

Nowadays....the most I can get on any "Ad" program is $595 from local businesses.

Thanks,
Don Alm

Hi Don,

Thanks for asking how to get $1500 for an ad campaign.

First I read the post from Shane wrong, sorry. I thought he was getting $1,500 from each advertiser by lumping together multiple locations. Now that I reread it I see he is getting $1,500 total for each location.

I have done just that in the bowling center advertising. I had two businesses that I sold 6 locations each at $495. I have had many more take 2,3 and 4 locations.

Best of success,

Skip Rosell

"First I read the post from Shane wrong, sorry. I thought he was getting $1,500 from each advertiser by lumping together multiple locations. Now that I reread it I see he is getting $1,500 total for each location."

Skip, both are correct.

On individual locations I've pulled in total between $1500 and $2200 for those sites.

When grouping together the six that I have now I'm charging between $1200 and $1800 per ad for all six sites.