Human Scale Business

This is podcast 3 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. A unique and compelling product is necessary to convert an "Okay" to an enthusiastic "Yes!" Distinctiveness can be derived from sources other than obvious product benefits, including the shopping experience, the product's origin story, or a cause.

This is podcast 12 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. The work by site owners to earn ongoing gifts of links from Google has been known as search engine optimization (SEO). These days, SEO may be more fully characterized as telling stories worthy of others' attention.

This is podcast 9 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. Simultaneous comparisons of alternatives ("A/B testing") yield valuable data about relative performance that leads to better decisions. Maybe even more important is that a culture of experimentation unleashes team creativity and confidence.

This is podcast 10 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, and framework for manufacturers who sell to consumers online. Utilize the best of permission marketing and other methods to accumulate direct relationships. Once you're making the most of your opportunity to solicit opt-ins to your email list and are communicating regularly with your subscribers, seek to scale traffic from other sources. Not before.

This is podcast 5 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. If marketing is storytelling, establish the character of your storyteller through the consistency of his or her voice and the integrity of his or her actions.

This is podcast 1 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. When your e-commerce platform is working well, it fades into the background. When the platform becomes an impediment, fixing it becomes the top priority.

This is podcast 6 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. The Web is built on links, and links are referrals. Referrals convey trustworthiness. To cultivate the trustworthiness and visibility of your site, anticipate how your stories might be interesting enough to warrant a link to your site for the "full story."

This is podcast 2 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing efforts, a framework for manufacturers who sell to consumers online. Understand the work to be done. Then cultivate a collection of specialists who can build, tell, measure, and sell.

This is podcast 8 of 12 featuring Patrick Pitman on How to Prioritize Your Digital Marketing Efforts, a framework for manufacturers who sell to consumers online. A funnel is a step-wise description of how a prospect moves toward becoming a customer. Defining and tracking such steps granularly improves the prospects for understanding which of your marketing actions are really effective. That will improve your ability to allocate time and money.

It's tough to bootstrap a craft or artisanal manufacturing business. That's because it's rare that profit – in the short term – is sufficient to fund expenditures for the accounts receivable, inventory, equipment, and marketing required for growth. Sooner or later, you're likely to need some kind of external financing. The problem is that small-scale makers of consumer products don't fit the criteria required by the usual suspects. If you need a few thousand dollars to maintain your business momentum, you may want to consider a Kiva Zip microloan as an alternative.

I spoke with Warren Vaughan and Heather Kearney about their experiences as a Kiva Zip lender and borrower, respectively. Their insights will help inform your decision about the conditions under which it might make sense for you to consider this innovative and inexpensive growth capital. First, though, let's explore the structural reasons that gave rise to Kiva Zip.

A Misfit with Traditional Sources of Funding

Small makers of consumer products aren't a good fit for traditional sources of business capital:

* Credit cards are readily available but expensive. The annual percentage rate (APR) on credit card balances can range from 15% to 30% or more. Furthermore, you may find that credit can be withdrawn if you maintain a balance for an extended period of time.

* Bank loans are for established companies that need to borrow tens of thousands to millions of dollars.

* Venture capital is for hyper-growth companies that offer the potential for a relatively quick "exit" by investors.

* Raising equity capital or loans from friends and family can place an inordinate strain on personal relationships if not structured carefully.

* Emerging peer-to-peer loan markets such as Lending Club can be a good alternative to credit cards, because they offer fixed rates and extended repayment terms. However, unless you already have an excellent credit rating, the rates on such loans can be very high.

What Bankers Want

Bankers are risk-averse – for good reason. A while ago, I spoke about why the behavior of bankers is easy to understand and anticipate.

The Pressure for Banks to be Big

Finance wants to be big. It's easy to understand why. After all, which is likely to be easier and more profitable as a lender: making 1 x $1,000,000 loan or 1,000 x $1,000 loans? The economies of scale of finance is reflected in the growth in the average size of commercial banks over time:

* In 1994, there were 10,453 commercial banks that had, on average, $384 million in total assets.

* By 2014, the number of banks had fallen to 5,643, but their average size had grown to $2.5 billion in assets. The largest banks in the U.S. now have total assets of $2 trillion or more.

Source: FDIC

One consequence of these trends is that it's increasingly difficult for banks to know their customers personally, even as technology has enabled lenders to access growing amounts of data about potential borrowers.

Character Has Gone Missing from the Credit Equation

Historically, lenders have relied upon the "4 C's" to assess the creditworthiness of a prospective borrower:

* Character is a qualitative assessment of a borrower's trustworthiness and will to repay a loan in a timely fashion.

* Capacity refers to the anticipated cash flow of the borrower relative to scheduled debt service payments.

* Capital is a measure of the strength and liquidity of the borrower's balance sheet.

* Condition means the environmental conditions that could impact the borrower's ability to repay its debt over time.

As banks have grown in size and, consequently,