The State of Capital Markets for Expanding and Emerging Businesses

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The economic turn-around is bringing more than competitive disruptions to independent start-ups and existing businesses that are looking to expand and grow. Funding options are expanding to include venture capital, angel investing, private equity markets as well as traditional bank lending. Each funding option comes with its own set of requirements, costs and performance characteristics. This year’s Pepperdine Private Capital Markets Report (PPCMR) specifically examines the behavior of senior lenders, asset-based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately-held businesses, investment bankers, business brokers, limited partners, and business appraisers.

The Pepperdine Private Cost of Capital (PCOC) survey is conducted each year by Pepperdine University Libraries  and investigates each private capital market segment, the important benchmarks that must be met in order to qualify for each particular capital type, how much capital is typically accessible, what the required returns are for extending capital in today’s economic environment, and outlooks on demand for various capital types, interest rates, and the economy in general. Originally launched in 2007, the report was the first comprehensive and simultaneous investigation of the major private capital market segments.

The report findings indicate that the cost of business capital varies depending on the size of the funding, the type and the level of risk. “The data reveal that bank loans have the lowest average rates while capital obtained from angels has the highest average rates”. Other sources reveal that 2018 turned out to be a boom year for non-bank business lending as a reported 80 percent of small bank business loans were rejected.

The accepted thought among a majority of business soothsayers is that 2019 will be a good year for optimistic entrepreneurs to engage plans to open or expand their business. However, 39 percent of the responders to the PCOC survey believe that general business conditions will worsen over the next 24 months and that nearly 44 percent of predicted loan demands would increase. A third of the lenders responding to the survey thought domestic economic uncertainty was a leading issue for independent businesses that sought to expand in the coming year. Labor availability and access to capital were also seen as complicating issues.

Refinancing, expansion and acquisition was the most commonly described financing motivation and concern for debt-service coverage ratio remains the most important factor when deciding whether or not to invest. Loans between $1 million to $10 million require the greater amount of personal guarantee and collateral. The survey reports that 31% of cash flow applications were declined; 34% of applications were declined due to poor quality of earnings and/or cash flow and 19% were declined due to insufficient collateral.

Despite all the preponderance of predictions, funding an independent business comes with significant risk both for the borrower and lender. Regardless of the source, spending investment dollars wisely remains an important factor for success. While most organizations are applying their investment dollars responsibly, it is important to be reminded that there is no such thing as “free” money. Gaining the best information on the available sources and the cost and requirements associated with each is critical to the success of any start-up or expansion plan.

Securing a Website with an SSL Certificate is More Important than Ever Before

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More than a billion web users’ personal information was stolen by cyber hackers in 2018. While large companies appear to be the victim of the vast majority of attacks, small business websites are proving to be an attractive target for cyber criminals looking to find an easy pathway to the riches that can come from the fraudulent use of everyday consumers’ personal financial information. While the level of illegal intrusion leveled-off last year, security experts are warning that recent advancements in website security measures may be doomed to the insistent and persistent improvement in hackers’ ability to adapt to the new security improvements.

Not unlike burglars who pass by homes with obvious security systems for an unprotected target, cyber criminals are turning to small business websites that fail to take even the most basic security actions to protect customer data. While the past two years have seen a dramatic increase in the number of websites taking actions to protect customers’ personal information, more remains to be done. The number of websites supporting HTTPS over encrypted Secure Socket Layer (SSL)/TLS connections has skyrocketed over the past year. Recent studies reveal that over 50 percent of web traffic is now encrypted. “Many sites need to catch up to avoid the ‘Not Secure’ warnings,” said DigiCert chief product officer Jeremy Rowley. “We urge IT administrators to check the sites they look after and deploy the appropriate TLS certificates.”

Perhaps the greatest incentive for website owners to gravitate to HTTPS protocol is coming soon from Google. With the release of Chrome 68 later this year, the search engine leader will mark all sites that haven’t adopted HTTPS as “Not Secure”. All other secured sites will continue to be displayed with green https letters in the URL, which means they are secured by an SSL certificate. Google will also give websites with encrypted connections a slight rankings boost. Imagine the number of website visitors who will be reluctant to frequent a company’s site when they are confronted with an “unsecure” warning. The consumer demands for increased web security is on the rise and consumer awareness of cyber security victimizations is heightened. It has been predicted that the Microsoft, Apple and Mozilla search engines will likely follow Google’s direction.

Research conducted by Ipsos, a global market research and consulting firm, found that 87% of internet users will not complete a transaction if they see a browser warning on a web page and more than half of respondents indicated they would seek to complete the purchase on a competitor’s secured website. SSL certificates have been available for decades but many website owners have delayed activation due to the perceived high cost and complications of implementation.

The cost associated with migrating to HTTPS and its significant benefits to a web owner is quickly becoming more affordable. Many hosting providers are offering free SSL certificates to clients. With “trust” becoming an important factor in the marketer/consumer relationship, a “secure” banner across the top of a company’s website is an indication that the site’s owner shares their customers’ concern for data security.

It’s Time to Play the March Madness Advertising Game

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Unlike 2018, the big NCAA 2019 basketball tournament event is not burdened with the pressure of battling clean-up. March Madness 2019 is predicted to set a new record of $1.36 billion in advertising spend, continuing an upward tradition since 2013. The NCAA Men’s Division I Final Four will be hosted by the city of Minneapolis, and is predicted to generate $142 million in economic impact for the area and attract 94,000 visitors to the U.S. Bank Stadium.  “In terms of impact, visitor spending is only one way to think about success,” says CEO Kate Mortenson, NCAA Final Four Minneapolis Organizing Committee. While the city looks forward to the promise of an economic windfall, a list of international brands is gearing up for an opportunity to promote their wares to the millions of college basketball fans who will be tuning in to the weeks-long event leading up to the big game.

The NCAA has announced that this year’s tournament will be streaming across 15 platforms in an effort to keep pace with a more mobile viewing audience. Mobile experiences will be very important to fans and advertisers will need to heed the viewers’ continued gravitational pull away from traditional cable and broadcast channels. The most successful brands will be those that connect all the channels into one cohesive campaign that brings basketball fans together with the brand.

Social media platforms such as Facebook, Instagram and Twitter will continue to build relationships between fans and brands. Official March Madness social media handles generated 26 million social engagements across these popular channels last year. Marketers will need to prepare ahead in order to capture prolonged customer attention.  “It’s about speaking to the audience, whether they’re preparing for their bracket or starting a competition with friends and family. And it’s about thinking of the length of time you’re spending with consumers,” says Courtney McKlveen, VP and Industry Lead of Retail, Travel and QSR at Yahoo. “ The word ‘loyalty’ is fun to throw around, but it still exists. In order to build loyalty, it takes time, and it means being there throughout the shopping cycle, and having the confidence to think about your ROI differently.”

Casual-dining brand Buffalo Wild Wings is launching its “That’s March Madness” TV spots and digital ads urging viewers to visit its restaurants to watch the tournament. In addition to their usual broad selection of brew and spicy wings, the 1,200-unit Buffalo Wild Wings chain is rolling out custom-designed “Jewel Stools” in Los Angeles and New York City. “Man caves and technology have divided us, conquered us and allowed a part of our herd to be divided,” says Scot Crooker, associate creative director at The Martin Agency, Buffalo Wild Wings’ advertising agency. “Sports is about finding your tribe.”

Whether you choose one or all of the available channels, there are more ways than ever for a brand to engage with an audience during March Madness. While the digital play provides social analytics that can generate immediate message effectiveness, display and sponsorship advertising often requires an incubation period following the performance to measure success or failure. It’s time to establish a strategy and tip off your best effort to connect with our nation’s college basketball fans.

The Changing Complexity of Advertising

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Once it was enough just to be careful where you placed the company logo or how you stated an advertising message. It was fairly simple. Prudence dictated that the company’s persona should not appear in a publication or in a position where accompanying content would cast a negative light on the brand. Certain publications were off limits, depending on the brand and the publication’s content. Messaging followed some basic dos and don’ts, usually established by some unseen censor whose job it was to monitor the sensitivities of “Joe or Josephine public” and establish some simple set of norms to be followed. Generalized messages were broadcasted to a wide audience and communication channels were fewer and relatively easy to monitor.

Careless advertisers were often chastised for testing the limits of the accepted norms of society, presenting content and images that nudged the outer edges of what was considered responsible behavior. Offenders either earned the rebuke and condemnation of a community or received accolades from those who appreciated a marketer’s sense of adventure. Either way, the risk of serious damage to a brand’s reputation was often tempered by an off-setting reward of increased public notoriety.

Ethical conduct in advertising and marketing has long been ripe with controversy and the subject of intense debates. The field of advertising is quickly becoming an environment where the definition of responsible is increasingly fragmented and more comprehensive than ever before. The process of creative discipline in advertising is changing dramatically and at warp speed. Parsing every word of content and scrutinizing every image in order to ensure (as much as possible) that the final effort doesn’t offend an increasingly diverse universe of consumers is a challenging effort.

“Niche is the new mass market,” says director and producer Justin Ching. “Gone are the days when you can appeal to everyone with your messaging, because of audience fragmentation.” Thirty years ago it was enough to sell a man a close, comfortable shave; today razor makers are selling a myriad of socially responsible issues as much as they are the blade and razor. Advertising is becoming a boxed set of social messaging and product features and benefits, carefully crafted to sell a solution while avoiding offending any one consumer or market segment.

YouTube is defending itself against what many are finding as objectionable content. Several big-name companies have pulled advertisements from the site over concerns their ads were running on videos of young children, primarily girls, on which pedophiles were making objectifying comments. In response, YouTube has disabled thousands of inappropriate comments and has suspended more than 400 offensive channels. “Any content, including viewer comments, that endangers minors is abhorrent and we have clear policies prohibiting this on YouTube,” a company statement said. “We took immediate action by deleting accounts and channels, reporting illegal activity to authorities and disabling comments on tens of millions of videos that include minors. There’s more to be done, and we continue to work to improve and catch abuse more quickly.”

It is hard to imagine that YouTube or any other marketing platform would deliberately risk such embarrassment and condemnation from its advertisers. The situation is an overt example of the difficulty and complexity of the challenges being faced by advertisers today.

The University of Maryland Center for Health and Homeland Security Leads the Industry with Value and Forward-Thinking Expertise

Formed shortly after the terrorist attacks on our Nation in September of 2001, The University of Maryland Center for Health and Homeland Security (CHHS) serves as the leader in policy development and legal analysis in the field of homeland security. Through its association with the University of Maryland, Baltimore, CHHS has grown to include partnerships with the Middle Atlantic Regional Center of Excellence for Biodefence and Emerging Infectious Diseases to bring together top experts from the scientific, emergency management, and public health communities.  Today, CHHS is home to a powerhouse of knowledge and expertise dedicated to the advancement of emergency management training, public health security, safety, and disaster recovery planning to public and private agencies across the United States.

CHHS’s forward-thinking expertise, led by Michael Greenberger, JD, includes academic programs and comprehensive consulting services that encompass community resilience, continuity of operations, cybersecurity, emergency management, exercise and training, health security, public safety technology, and recovery planning.  CHHS works with governmental and institutional organizations but maintains a focus on developing future emergency management leaders through Graduate degree programs and externships/internships.

“For organizations, both in the private sector and in the government, it’s critical to be prepared in the event of an emergency, from pandemics to government shutdowns.  The need for business continuity planning is often a low priority unless the threat is imminent.  The expert team at CHHS can assist your organization in preparing and planning to mitigate risk and limit the devastation in the event that a tragedy strikes,” comments Eric Oddo, Continuity Program Director, CHHS.

“The CHHS mission is critical for advancing our Nation’s security efforts. Their vast experience in emergency response, crisis management, cyber security and continuity of operations is a key resource for government and institutional organizations throughout the country. We are proud to have been selected to create a new online experience that effectively presents their comprehensive menu of services in a way that compliments the quality of their expertise,” comments Julie Gareleck, CEO & Managing Partner, Junction Creative Solutions. With more than 60 professionals on staff, CHHS continues to expand its client base in the Washington D.C., D.C. Metro, and Baltimore areas.  For those institutional and government organizations looking for tailored, holistic programs in emergency management and homeland security, contact us to learn more or call 410-706-1014.

Adopting Graphic Trends in Website Design to Boost Brand Success

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The results of a recent survey by Tyton Media is stressing the importance of website design in how customers perceive a brand. The survey indicated that 48 percent of people name website design as the biggest indicator of a company’s credibility. Website users are more likely to trust, remember, and connect with the brand if they find the website design consistent with the brand’s message and relevant to the brand’s reputation. Poor or irrelevant designs can alienate potential customers and create a negative impression. More than 80 percent of users who experience a poor web design will not return and are lost forever. So what design elements are trending in 2019?

Like fashion, popular designs tend to repeat themselves over time. What was fashionable in the past often reappears after falling out of favor. Amid the rise of 3D graphics, blogs, case studies, infographics, bold coloration, artificial intelligence and the predicted reemergence of hand-drawn graphics, simplicity is finding its reemergence into effective website design. The concept of “less is more” is finding renewed favor with designers and developers in 2019. Creating simple and concise messages that get straight to the point can be the most effective way to engage your audience. While simplicity makes a comeback, bold statements with bright color and gradient designs are trending up.

Today’s users are in a hurry, and “instant gratification” remains in vogue.  Websites have a narrow threshold of opportunity to attract, capture and move customers to initiate the buying decision. Removing unnecessary clutter, bells and whistles will help users navigate information and find the solutions they are seeking.  In the coming year, asymmetrical design is predicted to become a trend in order to attract a viewers’ attention. An unbalanced approach may just set a brand apart from the competition.

The use of animated GIFs and bots are finding their way into web designs at a greater pace, allowing for increased user convenience, more instant responses to customer inquiries and the ability for marketers to more directly target messages to consumer issues. Simpler layout, increased use of white space, flat design and clean practical aesthetics will premier.        Adapting to trending designs and using them to differentiate your brand and message will help cut through all the digital noise and set your brand apart from the competition.  To learn more about how Junction Creative Solutions’ (Junction) professional team of designers move your brand ahead of the competition, call 678-686-1125 today.