April 11, 2012
By: Melanie Berkowitz, Esq.
The power of the Internet and social media is evident in the recently passed Jumpstart Our Business Startups, or JOBS Act.
Touted as a way to help small businesses financing and startup companies to raise capital and find investors, the law enjoyed bipartisan support before the JOBS Act was signed by President Obama on April 5th, 2012.
Beyond Small Business Financing
If you’ve been reading about the law, you probably know that it greatly eases the regulatory burden on small companies looking to raise capital from small-time investors -- a mechanism known as “crowd funding.”
No longer will entrepreneurs-to-be end up stymied by the enormous costs (in both money and time) of filing ponderous SEC disclosures and other documentation prior to seeking investors.
Small Business Funding via Social Media
But the reach of the JOBS Act is far greater than the removal of regulatory barriers. Its passage coincides with the meteoric use of social media as a marketing tool, and while many small businesses are struggling to find their voice among the myriad of new media options.
The JOBS Act leverages the new media revolution and invites these small businesses and fledgling companies to create or expand their media presence by using the Internet to attract investors.
At a time when opening a Facebook account is as easy as getting a library card, many small businesses hope that raising capital will entail little more effort than creating a catchy status update and a couple of blog posts.
A company’s success in raising capital via the Internet is only going to be as strong as its new media policy overall, caution experts such as Jeremiah Sullivan, owner of Framework Media Strategies in Fords, New Jersey.
“If you have already been effectively using new media -- whether through social media sites, micro-blogging or other forms of content-sharing, potential investors are going to be much more likely to listen to your message when you ask them for money,” explains Sullivan.
I see a lot of small businesses using a more roundabout way to obtain financing -- by establishing themselves as an expert in their field first, and then seeking investors from a customer base that understands the company’s value first hand,” he adds.
Implementing an effective social media marketing strategy may be daunting for many small business owners, yet it will be crucial for companies looking to get the most out of their activities on the Internet.
What’s more, having a small business social media strategy in place before you start asking for money will give your company credibility and help you stand out from new enterprises that do not have anything of value to offer customers (and potential investors.)