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First, offering a referral incentive.
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I tried that. It worked to a degree, people used it, but didn't increase business a whole lot. For people to take notice, you need to offer enough of an incentive to make em go "wow...I'll do this". That's not cheap. (People are pretty blase about "5 bucks off your next party") You don't want to end up offering huge discounts for every party either.
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Second, websites, yellow pages, ads, etc.
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Yellow pages ad, yes. But don't go hog-wild with a big splashy ad. Make sure you get an ad in the yellow pages of any center that you'd be willing to go regularly for birthday parties. But just get a little box ad. And prepare to deal with a lot of people who are just looking for the cheapest...DON'T get caught up in that. Be prepared to let the odd gig slide.
Website, yes (though I haven't gotten around to taking my own advice yet) The popular wisdom seems to be that while it won't generate sales by itself, it WILL help seal the deal. You can direct people there to see what you look like and get a better idea of what you do...its a visual meduim, people like that. So make sure the website is on your business card. Try to get a domain name like stitches.com or something, and stay away from free pop-up sites, they're annoying and make you look cheap.
Newspaper ads- forget it if you live in a big city, your ad will get buried. (Might as well have flushed my money down the toilet.) But it can be effective and reasonably priced if you go into small town weeklies and such that are closeby.
And actually, I always had pretty good luck with bulletin board ads. One of the best uses of my cash was to pay the 10 dollar a month fee to put a small poster up on a bulletin board at some local ice rinks. Hockey moms are always scanning the boards while waiting for the kiddies to get suited and unsuited for their peewee games. (may not work outside of Canada) Only do this if you want to do a lot of birthday parties.
Another option, if they do this in your area, is those companies that make newsprint placemats for truck stops/diners/restaurants with ads on them.
I think the best investment though is a nice photo business card or even a postcard. (I actually like the ones that look like pseudo-baseball cards.) And give them out, give them out, give them out. Pay to get LOTS of them and give them out everywhere. Everytime you meet someone, give them a card. Everythime you use a payphone, leave one there. Everytime you read a magazine in a waiting room, tuck one in there.
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Lastly (for now), volunteering.
Is it worth volunteering to get your name out there?
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Volunteering: I would say the best way to get "exposure" is to get a regular weekly gig or two somewhere. Get a job working "kids night" at the local pizza shack, or get something for your local minor league ball team's home games. Firstly, these things are usually in the evening, and not during your prime business hours. Secondly, when you're there every week, folks tend to feel they know you and will look for you in particular when their kid's birthday comes up.
I wouldn't do one of these regular gigs for free, but you could always make some kind of arrangement. (Part of the arrangement is that you can freely give out stuff like coloring pages.) I used to do the pizza restaurant thing where they paid me my fee in vouchers. They got a clown, and I got a nice night once a week to go out for dinner with the mrs. (it was a nice place with a lot more on the menu than pizza) We both won. It got me a fair bit of birthday party business too.
As far as actual volunteering goes, the bottom line is to only do things you want to do for charities you like. Just don't become a doormat. If theres a band playing, and the band's getting paid and you're not, that's the last time I do that event for free. Ditto if they've asked me and I get to the event and there's another clown company there as well that I didn't know about. (thats happened to me a lot)
When you volunteer as a clown, YOU specify what's what, not them. You entertain the way YOU like. When they call wanting you to come, you say "Here's what I do/don't do for charity events like yours and here's what I require" I personally don't do balloons or face painting for charity, just walkaround, because thats what I like doing most and is essentially what I'm selling. If they need facepainters, they need to keep looking.
I do personally believe that we all have to do
some free/charitable work...I think it keeps you honest about why you're clowning.
ANyway, thats enough out of me. Hope this helps a bit.