How Do I Afford to Market?
How do you afford to market your business? How much should you spend on marketing? Two great questions! Small business owners often ask me this, bogged down by the head trash that they can’t afford to spend money on marketing. There are a number of ways to answer this, depending on your specific business marketing situation. Marketing Is Not Always About Spending Money For some of you, you don’t have to spend money to market your business. Instead, you have to spend your time. Everything you already do is marketing: networking, making phone calls, knocking on doors, blogging, social networking, etc. You sell yourself and you sell your services. That is one way to “save money.” But then you have to ask yourself, “How much is my time worth? Is this the best use of my time to grow my business?” Maybe it is for a little while, but when you start booking work, you should consider spending some money to have someone else handle the details of your marketing, so you can get yourself out of the “hourglass.” If you really want to grow your business and manage your business, you will need more marketing manpower. You Can’t Afford NOT to Market I’ve said this before in other blog posts and borrowed this saying from others: Marketing is everything you do or don’t do in your business. The way you answer your phone calls or respond to emails is marketing. You are (hopefully) telling your prospects something positive about the way you run your business. So you can’t afford not to market. You are always marketing. Therefore, make your marketing shine. Make changes in your business that will make every prospect want to become a customer for life. Create a Marketing Plan The best way to know how much money to spend on marketing is to do a bit of planning. It is not a lot of fun for most of us, but the more you know about your business, the better. It is actually very rewarding to know how much a lead actually cost or what your closing percentage is on any given job. My clients typically run monthly or quarterly reports on their marketing efforts. We then look at where all their leads come from, how many were sold, lost and what the cost of those jobs were. We then can determine which efforts we’ll continue, will cut or put more effort into in the future. So market research and review are vital to the success of your company. I will add that, depending on your business, not all marketing dollars will convert right away. Sometimes you have to create a plan that is primarily branding-related. I recently had a customer tell me he didn’t really like advertising with a certain vendor. He thought it was too expensive and wasn’t sure the return on investment was worth it. I asked him to send me a market and sales source report. I ran the numbers and came back to my client and said he should spend more with that vendor! Why? Because his closing ratio was very high, his average job cost was good, and the amount of leads he received were more than any other source. Therefore, if he cut the marketing dollars down, he’d cut his total revenue down as well. He took my advice and spent more with this outfit. Basically you need to know what your revenue goal is for the given year. What do you want to produce? Then you look at past data if you have it. If you don’t…do the best you can. Then you can put together a plan and calendar of how you’ll plan to market your business. Depending on your industry, you might need to set aside 2 – 3% of your targeted annual revenue goal and sometimes 4 – 5 or even 8 – 10%. As an example, most painters I work with average 3 – 5% for an established business. If they are new and just starting out, they would budget 7 – 10% of their revenue goals on marketing. To Sum it Up Here is a good practice on how you can begin to “afford” to market your business. When you finish a job, begin setting aside 5% for marketing efforts such as your website, mailers, trade shows, etc. Do this during a healthy month of business when sales are good. Then after 30 days, take that 5% and create a basic plan of how you’ll spend that money on marketing efforts. It is really about being disciplined and consistent, which will bring you the results you are looking for. The companies that are successful with generating leads don’t stop marketing.