Promotional giveaways are valuable marketing events that can be used to generate interest in a small business and increase sales. A special occasion can ensure that customers will want to visit and potentially make new purchases, which strengthens the company's bottom line.
Some small business owners enhance their giveaways by turning them into contests. After all, fun games encourage consumers to participate in an enterprise's marketing event because they want to win unique prizes. However, there are certain laws that entrepreneurs must work within when running contests.
According to the Small Business Administration, companies can't require customers to pay to increase their odds of winning or to receive their prizes, contact information must be given to all participants, the terms must be clear and there can't be any fraudulent endorsement notices. This is to ensure that consumers have all pertinent details in order to win the contests without being scammed.
Small business owners have to work within these rules to avoid potential legal troubles. Keeping these restrictions in mind will prevent entrepreneurs from running illegal contests that are subject to penalties and fines, which can hurt a company in both the long and short term.