This is a guest post from Gary Barzel. Gary is the manager of business development for FastUpFront, FastUpFront offers small business loan alternatives based on future sales.
In an ideal world, as you ramp up your marketing activity, you’d see an accompanying increase in revenues which would clearly justify any increase to your marketing budget. But many times, even where significant effort was made, marketing can be a hit or miss predicament. To be effective, promoting your business’ products and/or services is a flexible process that involves frequent consideration and evaluation in order to keep up with changing attitudes and trends, weed out the productive efforts from the unproductive ones, and refine those strategies that are already paying off.
But in the cash-strapped world that many small business owners are operating in, knowing how to balance marketing expenses with a tight operating budget can be a challenge. So how can you tell if that killer marketing idea is sustainable? Here are three vital points to consider:
1. Setting up a marketing budget. While there is no set rule for what percentage of revenues you should dedicate to your marketing activity, you still need to make sure that you will have enough cash flow to keep your business operations going. In some cases, it may even be appropriate to borrow money to pay for your marketing plans. It really depends on the kind of business you are running as well as how long the business has been in operation and what your expected payback is. A newer business, for example, may have to spend more marketing dollars at the beginning to get its name out.
And a final point… make sure you budget for your time as well. Time is money after all, and some marketing initiatives may be bigger draws on this precious commodity than others.
2. Prioritize your marketing goals. Whether you plan on hiring a marketing consultant or taking a DIY approach to promoting your business, you need to decide early on what your marketing goals will be. You also need to determine how realistic these goals are given your business’ setup and the amount of resources you are dedicating to each marketing strategy.
These benchmarks which include things like amount of traffic to your business or website, the number of customer inquiries, the sales conversion rate, and a count of repeat customers, can help to keep your marketing efforts focused. If something that you are doing isn’t bringing you closer to your goals, then it’s time to stop and re-evaluate the initiative.
3. Set up systems to evaluate ROI. ROI, or return on investment, is a term in finance that refers to the actual payback an individual or group receives from any given investment of resources. While it may be hard to put a concrete value on some kinds of marketing activity, such as sponsoring a local event, almost any initiative can be attached to some kind of measurement- even if it is anecdotal. You need to ensure that the resources you are putting in, are giving your business something adequate in return.
In short, the most important takeaway from all of the above, is that you need to be monitoring your marketing efforts with an eye towards seeing which ones are bringing your business more brand recognition among your target market and ultimately an increase in revenues. Without these processes in place, you might as well as be throwing your time and money in the wind.