In today's economic landscape, formulating a budget for anything, is the hardest task a small company can accomplish. The first thing budgeted is always going to be for rent and utilities. Lets face it, without those essentials, you really don't have a company to begin with. Next, is product and then employee payroll. The last thing that is budgeted (if they ever get that far) is for advertising. Most small businesses don't even think of their marketing as something they should budget. This has to be the worst and most detrimental mistake any small business owner can make. Marketing is your life line. Without telling people who you are and what you do, you simply won't have any customers. Sure, positive word-of- mouth is great, but what happens when that one customer that wasn't so pleased with you starts to spread the word about how unhappy they were with your work. Start waving good-bye because there goes your positive reputation right out the door along with your existing customers. A business can not, and should not rely on the sole phenomenon of word-of-mouth to get new business. I will supply you with some other inexpensive and mutually beneficial forms of advertising, but first, a few need-to-mention statistics...
1. In 2008 There were over 627,000 new businesses started in the U.S. In early 2009, 48,957 had closed it's doors or claimed bankruptcy. As of June 2010, another 112,302 businesses ceased to operate.
2. Last year (2010) in the state of Florida, 43,432 new businesses were incorporated. As of November of 2010, nearly half of those businesses were no longer in existence. It has been forecasted that another 1/3 of those remaining will also decide to halt operations.
3. The number one reason for closure across all industries of those businesses was not enough income and bad business practices, including bad accounting and no advertising.
(Now I would like all of you business owners that just read this to take a deep breath and let it out very slowly before we continue).
4. According to several market research studies conducted between 2008 and 2010, the first thing that successful corporations do when confronted with a decreasing bottom line is increase their advertising budget.
5. The standard percentage for any marketing budget across any given industry is 30% of their operating budget. When in economic downturn, it gets increased to 50% of their operating budget. (This is a template used by the largest and most profitable companies in the world, not just the U.S.).
The signs are clear. A company that is attempting to operate without any type of marketing budget, unfortunately, is doomed for failure. It has been proven time and again that advertising, is THE most important aspect of any business model, yet it seems to be the most neglected. This is mostly due to the lack of education as to what media to use to spread the word, and the general consensus that advertising is expensive. It's absolutely true. Advertising IS expensive if you don't administer it properly. It's like taking medication... If you are ill and aren't taking the proper medication in the correct quantities, you will never get better. As is with advertising. If you keep spending money on experimental medias hoping that one of them is going to be the magical key, of course it's going to be expensive, because you will never see results.
Advertising should be an investment for your business, with trackable and monitored results and returns. It's what we like to call ROI. If you are being courted by any kind of advertising medium and they can't provide you with proof of your return or an ROI worksheet, then they are not worth the try. Lets face it, in this economy, no one has the money to just throw around on a risk or a branding campaign. There are tried and true methods to figure out what is going to work best for your industry. History plays a big part into this determination. The biggest role is played by the medias ability to audit itself and provide factual numbers on their users, traffic, readership and the justification of it's fees for the various products they offer. In short, if they can't prove to you that you can make money from what they are offering, then don't invest. And yes, all of this investigating and analyzing takes time. If you don't think that you can muster up the time or patience to deal with the intricacies of the process, then hire an advertising agency to help you. Don't be intimidated by hiring a professional to help you. You wouldn't try to represent yourself in court unless you had a degree in law, right? I would certainly hope you would hire an experienced lawyer to do that for you. Advertising professionals go to school just as long as lawyers and doctors do to get their degrees. We also have continued education that we must attend to ensure that we are providing all of the latest information and trends in the industry. In essence, we are consultants in the investment most likely to make you money... your own business!
But I digress. As promised, here is a list of medias that are generally the most profitable for the time and investment that you put into them.
*Social Medias - A little on the time consuming side, but the more you tweet, post and chat, the more traffic you'll get to your web site.
*E-mail Marketing - Use your existing clients as low hanging fruit. Send monthly updates on specials and new industry information via e-mail and keep yourself top of mind with them.
*Offer Referral Incentives - If you don't ask, you won't get! For everyone that refers new clients to you, give them a big hearty thanks by providing them discounts or special incentives for doing so.
*Offer a frequent buyer program - This is especially beneficial for retail establishments, restaurants or service based industries that thrive on repeat business. They will be coming back for more if they know they will be rewarding for using your services rather than your competitions.
*Networking Groups - These groups are a dime-a-dozen in all major markets. And most of them will only allow a one or two people in any given industry to be part of their clique. The beauty is that it becomes a captive audience for your message and turns you into their personal expert in your field.
*Write a BLOG - Let everyone know about what you do and what happens in your industry on a weekly or monthly basis. Funny stories, entertaining banter, or relevant timely issues relating to your business will let people familiarize themselves with you on a personal level. this will make them feel more comfortable when they come to you for services or products.
If you have any questions about any of the topics I have discussed here or in any other of my posts, or would like to discuss how we can help you to push your business into the next level, please feel free to contact us at your convenience. We are always here to provide you with our expertise!
Mojo Media Miami International, e-mail us at clientservices@mojomediamiami.com or call us direct, 786-200-9169.
I agreee that most small companies ct their marketing when things go bad!
ReplyDeleteBUT the main reason for failure -- linked to cutting advertising -- is they don't know how to manage cash flow. That's where everything starts or finishes! (and I'm a marketing guy!)