How Do I Afford to Market?

Posted by David Chism | Thu, Nov 29, 2012

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.

About David Chism

David Chism started his business out of a passion for helping small contracting businesses grow, be more profitable and become better known to their target clients. One lifelong hobby of David is using techie gadgets. So this blog is a place where he writes about technology, marketing ideas, just for fun (humor), personal thoughts on small business and more.


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