By EMILY MALTBY, The Wall Street Journal

It’s a common conundrum for business owners when sales aren’t pouring in.

To get more customers, you need to market and advertise. But when cash is sparse, it’s tough to allocate dollars toward promotional efforts, especially when there’s no guarantee of a return.

Amid the economic downturn, nearly half of business owners say they’re straining to find efficient or innovative ways to market their products or services, according to a March survey of 734 entrepreneurs by American Express OPEN, the company’s small-business division.

Active Healthcare
Lisa Feierstein has targeted specific customers to use her firm’s respiratory products by offering free screening and education sessions. Here, she runs a sleep apnea support group conducted last fall.

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Start-Ups on a Shoestring

For many, the outlay of cash is simply too risky. “It’s a Catch-22. When business is slow, entrepreneurs don’t have as much money [but] one of the things you need is more advertising,” says Greg Gould, director of the Maine Small Business Development Center in Portland. “You should be spending more in a slow economy, not less.”

To minimize the potential drain on the budget, some business owners are trying creative or highly targeted means of reaching potential clients, Mr. Gould says. (Please read how numerous entrepreneurs are trying to land clients in the gallery at bottom.)

For example, Mr. Gould is seeing more owners aggressively aiming to reach a specific demographic. A small company selling baby toys, for instance, might comb wedding announcements and send catalogues or brochures to recently married couples, rather than placing a generic ad in a newspaper or a magazine. Otherwise, “you might be paying to reach people you may not want to reach,” he says.

Other business owners are focusing more on niches or specialties within their industry.

Lisa Feierstein, president of Active Healthcare Inc. in Raleigh, N.C., which provides medical equipment to treat a variety of respiratory conditions, directs her marketing efforts toward sleep apnea sufferers. “We were determined to not be a victim of the economy,” says Ms. Feierstein, who used to wait for physicians to refer clients to her.

One day a week last March, which is Sleep Awareness Month, she held free sleep apnea screenings and provided free repairs on sleep apnea equipment, even if purchased from a competitor.

The efforts proved successful. About 150 people came in for screenings, and between 10% and 15% returned as patients, Ms. Feierstein estimates. And of the 50 people who came to get their equipment serviced, about 75% are now repeat customers who get services and supplies through her company.

Mr. Gould says that offering free services can work to entice new customers, but that owners should go a step further, handing out coupons or promotions to encourage customers to come back. Otherwise, the strategy could end up being quite costly.

Other small-business owners less keen on offering freebies are dedicating more time to strengthening their online presence, says Marc Karasu, a marketing consultant in New York who specializes in digital-marketing tools. “You don’t need to be an expert,” he says. “There are resources that didn’t exist even a few years ago that level the playing field.”

Some entrepreneurs are learning more about search engine optimization. Others are providing customers with online newsletters or blog feeds. Owners are also responding and engaging customers on review sites such as Yelp and Angie’s List, Mr. Karasu says.

Owners can also build communities using social-networking sites like Facebook and Twitter. Still, 74% of business owners say they do not use social-networking tools, according to the American Express survey.

Michael Sinkin, a dentist in New York, says he used to be “intimidated” at the thought of developing an online presence. Last year, he was skeptical of the effort required to create a website, “but once the site was launched and I saw it, I realized it was nifty,” he says.

Now, Dr. Sinkin is a regular social-media guru. He regularly writes on his blog, which he then touts on Twitter and Facebook.

This summer, the number of new patients seeking his service has doubled. Part of the success, he says, came from a situation where a British businesswoman, traveling in New York for a short stint, sent out a Twitter message asking for dental help because her tooth had cracked. One of Dr. Sinkin’s Twitter followers replied to her, providing his office details. Dr. Sinkin fixed the dental problem the next day. After the businesswoman left, she turned to Twitter again to rave about the level of care the dentist had provided.

“Virtual word of mouth becomes viral,” says Dr. Sinkin, who has 1,500 Twitter followers and estimates picking up six new patients from the traveler’s tweets. “I used to just give toothbrushes and toothpaste but now I have cards printed up that say ‘Follow me on Twitter.’ “