Every month, the National Federation of Independent Business checks the pulse of small business owners like us. When you ask the question, 'How are things?' I'm going to tell you, 'I could always use more customers.' We all answer that way. But, the NFIB says with more specificity that we're really worried about recruiting talent, paying taxes, and managing insurance more than we're worried about marketing ourselves.
In light of all the other business ownership challenges and costs, we're faced with the decision to advertise. Or not to advertise. Instead, every business owner should ask, 'Can I afford NOT to advertise?'
If you're in the enviable position that you have so many clients you have to shut the door to new business, you're alone. Even Amazon needs more customers.
Since we conclude you can't afford not to advertise, the challenge is to find advertising value. The first part of any discussion of value is to determine budget. Take 10 percent of your projected gross sales times the markup percentage on your average sale. (Markup isn't margin, it's your gross profit above cost. Margin is gross profit as a percentage of selling price.) Subtract your business rent. This is your minimum marketing budget. Do the same calculation on 12 percent of your gross sales. That's your maximum marketing budget. Plug in an extra 20 percent more of the min and max if you have not marketed yourself, your business or products before.
In the next five A Little on Business Marketing segments we'll touch on affordable ways you can reach customers, like Referrals, Mailings, Branding, Sponsorship, and Traditional Advertising.John Wanamaker, an entrepreneur at the beginning of the last century, famously said, “Half the money I spend on advertising is wasted. The trouble is I don't know which half.” Wanamaker's is the store he founded. A building bears his name to this day in Philadelphia. More importantly, his trouble of knowing 'which half was wasted' lead him to pioneer marketing concepts like referrals and branding as the Father of Marketing. He made sure he wasn’t wasting half any longer… are you?
Photo: SergeyNevins, used with permission.