And how can they affect if you can get funding? We tell you all about NAICS Codes. They could be the difference between getting business money or not getting any money.
NAICS Codes: Some Background
Federal statistical agencies use the North American Industry Classification System (NAICS) . The idea is to classify business establishments. This is to collect, analyze, and publish statistical data, related to the U.S. business economy.
What is the NAICS Structure and How Many Digits are in an NAICS Code?
NAICS is a 2- through 6-digit hierarchical classification system. It offers five levels of detail. Each digit in the code is part of a series of progressively narrower categories. The more digits in the code, the more classification detail.
Details on NAICS Code Structure
The first two digits are the economic sector. The third digit designates the subsector. And the fourth digit designates the industry group. The fifth digit designates the NAICS industry. The sixth digit designates the national industry.
A 5-digit NAICS code is comparable in code and definitions for most of the NAICS sectors. This is across the three countries participating in NAICS. They are the United States, Canada, and Mexico. The 6-digit level lets the U.S., Canada, and Mexico all have country-specific detail. A complete and valid NAICS code has six digits.
Codes and Industries
NAICS industry codes define businesses based on the primary activities they engage in. Recently, the NAICS changed many of its codes as it updated its philosophy. It no longer sets aside online businesses. Now the NAICS no longer distinguishes businesses by how they deliver goods or services.
High Risk NAICS Codes
There is an older NAICS list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores. But it also included automotive dealers and restaurants. But this list is from 2014 and does not appear to have ever gotten any updating.
Per the NAICS, various professionals in the banking industry compiled the list. The idea was to use it as a working guide. But it is not an officially sanctioned list. They do not guarantee the accuracy of this list.
Codes and Risk
When considering any aspects of a business, risk must be a major factor. There are inherent issues in every single industry. But some businesses are considered to be risky by their very nature. This is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Even if your business doesn’t feel risky, it could be anyway.
The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.
In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include:
Crowdfunding
Angel investors
Venture capital
Business credit building and more
Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the degree of risk coming from? One clue comes from the CDC.
Real Injury Risks According to the CDC
The Centers for Disease Control looks at risks in small businesses. Part of the calculation of risk comes from occupational injuries. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean it can be a tempting target for thieves.
A Look at Some Restricted Industries
These industries (among many others) can get an automatic decline:
Ammunition or weapons manufacturing; wholesale and retail
Energy, oil trading, or petroleum extraction or production
Gaming or gambling activities
Loans for the speculative purchases of securities or goods
Political campaigns, candidates, or committees
Public administration
City, county, state, and federal governmental agencies
These industries (among many others) can be subject to stricter underwriting guidelines:
Auto, RV or boat sales
Computer and software related services including programming
Dry cleaners
Gas stations or convenience stores
Limousine services
Long distance or “over-the-road” trucking
Mobile or manufactured home sales
Phone sales and direct selling establishments
Real estate agents/brokers
Real estate developers or land sub-dividers
Restaurants or drinking establishments
Taxi cabs
This includes buying cab medallions
Travel agencies
A Look at Some High-Risk NAICS Codes
According to the older list, the following codes are among those considered to be high risk:
445310 – Beer, Wine, and Liquor Stores
424940 – Tobacco and Tobacco Product Merchant Wholesalers
811113 – Automotive Transmission Repair
How do you choose a better code?
Using a Different NAICS Code
Of course you want to be 100% honest when it comes to selecting your NAICS code. But if more than one can apply, you don’t have to choose the one that’s higher risk. So it pays to check and be careful when making your selection.
Also, if only high risk codes apply, there’s nothing wrong with changing your business. Then you may be able to match a related but lower risk code. There is nothing underhanded or dishonest about doing this.
An Example of How to Switch an NAICS Code
Let’s say your business is automotive transmission repair (NAICS Code 811113). We know this is a high risk code. But 811191 is not on the NAICS list. It covers Automotive Oil Change and Lubrication Shops. So why not offer oil changes and use the lower risk code? It could be the difference between getting funding, or not.
Which Agencies Use NAICS Codes?
The Internal Revenue Service will use the NAICS code you select. This is to see if your business tax returns are comparable to other businesses in your industry. If your deductions do not reasonably resemble other businesses in your industry, your business could be subject to an audit.
The IRS may label some companies as high-risk when they do not choose the right NAICS code. But if you know how the system works, then you can choose the correct code on your first try.
Which Agencies Other Than the IRS Use These Codes?
Lenders, banks, insurance companies, and business CRAs all use codes. They tend to use both NAICS and SIC Codes. SIC Codes are the older business classification system. D&B uses both SIC and NAICS Codes.
OSHA uses NAICS Codes for industry identification in its data. These agencies use them to determine if your business is in a high-risk industry. So you could get a loan or business credit card denial based on your business classification. Some SIC codes in particular can trigger automatic turn-downs. You could end up paying higher premiums, and get reduced credit limits for your business.
There Are No Guarantees in Life
Will a better NAICS code guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make a case for funding.
NAICS Codes: Takeaways
Industries are defined by codes from the North American Industry Classification System. Codes go up to six digits for the most granular information. Some codes are always associated with high risk. This makes it harder to get business funding. So if more than one NAICS code can apply to your business, pick the one that’s less risky.
And how can they affect if you can get funding? We tell you all about NAICS Codes. They could be the difference between getting business money or not getting any money.
NAICS Codes: Some Background
Federal statistical agencies use the North American Industry Classification System (NAICS) . The idea is to classify business establishments. This is to collect, analyze, and publish statistical data, related to the U.S. business economy.
What is the NAICS Structure and How Many Digits are in an NAICS Code?
NAICS is a 2- through 6-digit hierarchical classification system. It offers five levels of detail. Each digit in the code is part of a series of progressively narrower categories. The more digits in the code, the more classification detail.
Details on NAICS Code Structure
The first two digits are the economic sector. The third digit designates the subsector. And the fourth digit designates the industry group. The fifth digit designates the NAICS industry. The sixth digit designates the national industry.
A 5-digit NAICS code is comparable in code and definitions for most of the NAICS sectors. This is across the three countries participating in NAICS. They are the United States, Canada, and Mexico. The 6-digit level lets the U.S., Canada, and Mexico all have country-specific detail. A complete and valid NAICS code has six digits.
Codes and Industries
NAICS industry codes define businesses based on the primary activities they engage in. Recently, the NAICS changed many of its codes as it updated its philosophy. It no longer sets aside online businesses. Now the NAICS no longer distinguishes businesses by how they deliver goods or services.
High Risk NAICS Codes
There is an older NAICS list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores. But it also included automotive dealers and restaurants. But this list is from 2014 and does not appear to have ever gotten any updating.
Per the NAICS, various professionals in the banking industry compiled the list. The idea was to use it as a working guide. But it is not an officially sanctioned list. They do not guarantee the accuracy of this list.
Codes and Risk
When considering any aspects of a business, risk must be a major factor. There are inherent issues in every single industry. But some businesses are considered to be risky by their very nature. This is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Even if your business doesn’t feel risky, it could be anyway.
The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.
In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include:
Crowdfunding
Angel investors
Venture capital
Business credit building and more
Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the degree of risk coming from? One clue comes from the CDC.
Real Injury Risks According to the CDC
The Centers for Disease Control looks at risks in small businesses. Part of the calculation of risk comes from occupational injuries. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean it can be a tempting target for thieves.
A Look at Some Restricted Industries
These industries (among many others) can get an automatic decline:
Ammunition or weapons manufacturing; wholesale and retail
Energy, oil trading, or petroleum extraction or production
Gaming or gambling activities
Loans for the speculative purchases of securities or goods
Political campaigns, candidates, or committees
Public administration
City, county, state, and federal governmental agencies
These industries (among many others) can be subject to stricter underwriting guidelines:
Auto, RV or boat sales
Computer and software related services including programming
Dry cleaners
Gas stations or convenience stores
Limousine services
Long distance or “over-the-road” trucking
Mobile or manufactured home sales
Phone sales and direct selling establishments
Real estate agents/brokers
Real estate developers or land sub-dividers
Restaurants or drinking establishments
Taxi cabs
This includes buying cab medallions
Travel agencies
A Look at Some High-Risk NAICS Codes
According to the older list, the following codes are among those considered to be high risk:
445310 – Beer, Wine, and Liquor Stores
424940 – Tobacco and Tobacco Product Merchant Wholesalers
811113 – Automotive Transmission Repair
How do you choose a better code?
Using a Different NAICS Code
Of course you want to be 100% honest when it comes to selecting your NAICS code. But if more than one can apply, you don’t have to choose the one that’s higher risk. So it pays to check and be careful when making your selection.
Also, if only high risk codes apply, there’s nothing wrong with changing your business. Then you may be able to match a related but lower risk code. There is nothing underhanded or dishonest about doing this.
An Example of How to Switch an NAICS Code
Let’s say your business is automotive transmission repair (NAICS Code 811113). We know this is a high risk code. But 811191 is not on the NAICS list. It covers Automotive Oil Change and Lubrication Shops. So why not offer oil changes and use the lower risk code? It could be the difference between getting funding, or not.
Which Agencies Use NAICS Codes?
The Internal Revenue Service will use the NAICS code you select. This is to see if your business tax returns are comparable to other businesses in your industry. If your deductions do not reasonably resemble other businesses in your industry, your business could be subject to an audit.
The IRS may label some companies as high-risk when they do not choose the right NAICS code. But if you know how the system works, then you can choose the correct code on your first try.
Which Agencies Other Than the IRS Use These Codes?
Lenders, banks, insurance companies, and business CRAs all use codes. They tend to use both NAICS and SIC Codes. SIC Codes are the older business classification system. D&B uses both SIC and NAICS Codes.
OSHA uses NAICS Codes for industry identification in its data. These agencies use them to determine if your business is in a high-risk industry. So you could get a loan or business credit card denial based on your business classification. Some SIC codes in particular can trigger automatic turn-downs. You could end up paying higher premiums, and get reduced credit limits for your business.
There Are No Guarantees in Life
Will a better NAICS code guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make a case for funding.
NAICS Codes: Takeaways
Industries are defined by codes from the North American Industry Classification System. Codes go up to six digits for the most granular information. Some codes are always associated with high risk. This makes it harder to get business funding. So if more than one NAICS code can apply to your business, pick the one that’s less risky.
Formula One is considering easing some of its strict COVID-19 ‘bubble’ protocols, in force since last year, so teams can entertain sponsors and guests more freely at races.
Here is a common situation many startups face. They have no money, but they have to do marketing.
What can they do?
Instead of focusing on costly marketing methods, such startups must focus on low-budget marketing hacks.
The beauty of growth hacking is that it engages alternate methods of growth, methods which are sometimes lower cost.
Where marketing and engineering meet, growth hacking happens.
Obviously, growth hacking isn’t free. Strictly speaking, none of the techniques in this article are “free.” Anytime you involve people, employees of the company, there will be payroll and associated costs.
But here’s why these (mostly) free marketing techniques are so powerful. They don’t require a huge marketing budget. All you need is some time, some savvy, and the kind of focused and driven perspective that smart marketing requires.
1. Get Links from Your Service Providers
To rank well, a website needs high-quality backlinks. Where do you get these backlinks? Obviously, buying links is not advised. What should you do?
If you’ve built partnerships with service providers or business partners, you have an instant source of untapped link potential. Reach out to these service providers and ask them to link to your website.
You gain a few nice links, and all it cost you was a few minutes of emailing.
If you find such mentions in online publications or websites, email the site editor and ask them to provide a link. You might discover plenty of brand mentions all over the web.
A quick search and a few emails later — presto. Free backlinks. The good kind.
3. Host a Webinar
Free webinars introduce your brand and product to a wider audience. The more appealing the topic, the better you’ll attract interest.
Webinars take time. You’ve got to brainstorm topics, plan the webinar, and spread the word. The benefits, however, are top-notch.
4. Cross-Promote
One explosive method of marketing that some companies use is cross-promotion. Cross-promotion allows you to partner with related businesses who can market your services, in exchange for marketing their services.
For example, if you are providing consulting services for online business owners, you may recommend that they use a certain web designer to create their website. The web designer is your cross-promoting partner. This web designer works with business clients, and she points these clients your way for consulting services.
It’s a win-win, and apart from a signed document and an easy conversation, it doesn’t require much work at all.
5. Be a Blog Commenter
The idea of marketing is to make your brand presence as well known as possible. One way of doing so is by commenting on blogs. Here’s how this works:
Identify the top 5 blogs in your niche.
Read and comment on the blogs on a regular basis.
As people see your name and associated brand, they become familiar with it and perhaps even curious about it.
With every comment, you’re establishing a persistent brand presence. Just make sure you’re not making dumb comments. Customers’ perception of your brand is shaped by the quality of your comments.
6. Help a Reporter Out
Occasionally, you’re going to come across some newsworthy information in your niche or business. Sign up for Help a Reporter Out (HARO). It’s a free service that reporters often use to find stories. If you have a story you can help a reporter out, and gain publicity.
7. Network in Person
Don’t neglect the opportunity to market in person. You’ll meet great people in person whom you may never come across online.
Every person you meet is another marketing possibility. Obviously, you don’t want to go around shoving your business into people’s faces, but as the issue of work comes up in conversation, tell them about it.
As much as they’ve been sullied and scammed, online contests are still a great way to get low-cost marketing publicity. Giving away the cliche iPad, cash prizes, or other merchandise is an easy way to gain some viral potential and improve your brand’s image.
9. Build a Referral Program
The best forms of marketing are those that you can set up, turn on, and grow — organically, automatically, and without too much effort. A referral program or affiliate program may not work for every business, but it’s worth a try.
Creating an affiliate program essentially turns your customers into a de facto marketing department. You don’t spend marketing money unless they first make a sale on your behalf.
10. Tweet Up a Storm In Your Niche
Twitter is a killer marketing platform. With its instant reach and massive output, Twitter can produce high levels of referral traffic, plenty of brand exposure, and nonstop social buzz.
What I suggest is following at least ten influencers in your niche, following their followers, retweeting their tweets, and mentioning them in comments. As you associate with their platform, you’ll begin to build your own platform.
Marketing back at your own customers is relatively easy and low-cost. The benefits are extraordinary.
12. Get Cozy With Niche Influencers
Within every industry are a group of power players. They control the conversation, shape the contours of the market, and reach a huge audience.
Make these people your friends. You don’t need to be schmoozy about it. You can be direct. Providing them with a product or partnering with them on a project are simple and mutually helpful ways to grow your brand and ride their wave of influence.
13. Claim a Hashtag
Hashtags are the billboards of the Internet. Since hashtags are now available on every major social platform, you can create a hashtag for your business and use it everywhere you post.
A hashtag is a searchable and interactive extension of your brand and has the potential to spread virally.
Everyone knows that content marketing is effective for inbound marketing. If you’re not careful, however, content marketing can be expensive. How can you gain more content without blowing your entire marketing budget?
The answer is user-generated content. Motivate your existing fans and customers to tell their own story and write content, and you’ll instantly open the floodgates to tons of fresh and engaging content that your audience will love. Your fans will be creating and sharing content for you.
16. Talk to Your Fans
Customers and fans love to be loved. The way you show that love is by retweeting, favoriting tweets, liking the comments, and sharing their status. Don’t simply expect that your social media presence is going to work for you. You have to work for it, by talking to your fans.
They will return the favor and engage at a deeper level.
17. Produce High-Quality Press Releases
Press releases have passed their heyday as an SEO tool, but they still hold sway in marketing. If you use a source like PRWeb, you’ll be out a few hundred bucks anytime you pop out a press release.
A source like PRLog.org, however, is free of charge. The amount of syndication you get may not be as high quality, but it’s something. And, hey, it’s something for nothing.
Just be sure to write very high-quality releases, and nofollow any links back to your website.
18. Hack Craigslist
Craigslist is one of the most popular websites in the world. Airbnb and its high money valuation used Craigslist to skyrocket its growth. You can use Craigslist, too. Try using Craigslist’s geographic focus to target specific areas and markets.
Make sure that you’re complying with the site’s terms of service. Use Craigslist in the way that it was intended. Violators will be banned from the site.
19. Blog
I can’t create a list of marketing techniques without mentioning blogging. A business blog is an indispensable strategy for online marketing. Use it, work at it, and make it work for you.
If blogging is awesome, then guest blogging is doubly awesome. When you post an article on another blog, you are instantly gaining that blog’s audience. The cost of guest blogging is free, less the time you spend. Create a killer article, appeal to the blog’s audience, and you may be invited back to contribute more.
I’ve used guest blogging with incredible success. My 300-and-counting guest blogs are still paying me back in terms of referral traffic, leads, and customers.
21. Create a LinkedIn Group
LinkedIn is free, and yet it gives you incredible marketing opportunities. Many professionals use LinkedIn as a static social media tool — a place to put up their resume, and not much else.
LinkedIn is so much more than an online resume. I’ve used LinkedIn to publish content, connect with powerful people, and build a marketing group with thousands of members.
All of this cost me zero dollars and zero cents, but the marketing upside has been incredible.
22. Give Free Help to Others
If you make marketing all about you and your business, you’re going to be frustrated and unfulfilled. Try giving to others, free of charge.
Obviously, you’re not a charity; you’re a business. But why not give away a product, an hour of your time, or a membership for a customer who can’t afford your services?
Some of the best business opportunities I’ve had were consulting gigs with customers who couldn’t pay. These opportunities have been beneficial in ways that I couldn’t have predicted.
Even today, I give away virtually all of my content without charge. Doing so is fulfilling for me personally, and it provides an opportunity for improved marketing.
Some ideas for free marketing include guest blogging, link building, creating social media groups built around your industry or brand, commenting on other blogs, and creating your own blog.
Is it possible to do marketing for free?
Yes, there are plenty of marketing techniques that are completely free.
Does guerilla marketing work?
When done correctly, guerilla marketing can help increase brand awareness.
Is it free to market on social media?
There are plenty of ways to market for free on social media. You can create groups, engage with influencers, use popular hashtags, create content with CTAs to your website, and more.
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Free Marketing Techniques Conclusion
Marketing doesn’t have to break your bank, blow your budget, or cost you thousands of dollars. Like I mentioned at the beginning of this article, marketing can require nothing more than the investment of time.
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