In the last post I told you how to find your Most Important Number.

Basically, this is the number of sales per month you need to generate with your “bread and butter” product to get you where you want to be financially.

Example: Windows is your main product. You’re selling eight window projects per month. So your Most Important Number might be 25 jobs per month.

Today, we’ll determine how to get the money to create the marketing budget to get to your Most Important Number and where to spend the money.

Because, let’s face it: It’s easy to say that if you were doing 25 window projects per month for $8,000 per job (and $4,000 gross profit), that you’d allot 15% of sales ($1,200 per sale) to marketing.

But when you realize that would require a monthly marketing budget of $30,000—over $20,000 more than what you’re currently spending—you automatically think, “How the heck do I get there?!”

Short answer: Patience.

Here’s what you do…

• Determine how much you’re ALREADY spending on marketing to get those eight sales.
• If eight sales mean $64,000 in revenue, then let’s say you’re already spending 15% of that, or $9,600. (Note: If you think 15% is too high, fine. Use your own numbers.)
• That means you need to generate an extra $20,400 in your marketing budget.
• Next, figure out how much extra money you can afford to spend RIGHT NOW on a monthly basis—taking cash flow into consideration—even if the extra money doesn’t produce an instant ROI. Some faith will be required here.
• This is where you need to be patient: I’m asking you to spend money right now you might otherwise put elsewhere—like your pockets.
• Invest that amount in aggressive marketing tactics likely to yield the most immediate returns: canvassing, PPC, guerilla marketing, past customer marketing, home shows, and direct response advertising.
• The goal here is not necessarily to make your IDEAL return-on-investment (15% marketing-to-sales in the example), though it’d be nice. The idea is to make back enough cash to pay for the advertising, THEN invest the lion’s share of the incremental revenue on your marketing budget. For example:
  • You determine you can afford to spend an EXTRA $5,000 a month on advertising on highly aggressive tactics, per above.
  • The first month you get two extra sales for a total of $16,000 ($8,000 of gross profit)
  • This means you made BACK your $5,000, PLUS an extra $3,000
  • Your accountant will tell you that’s terrible and to stop it. But don’t. Instead, double down.
  • Allocate 75% of the extra money to marketing, and 25% to overhead.
  • This gives you an EXTRA $2,250 in marketing budget ON TOP of the $5,000 you already committed to. The total extra marketing budget is now $7,250 for month 2.
  • Note: If the extra money you spent does NOT bring in enough extra sales to cover its cost, continue to invest that minimum amount each month until you find something that DOES work. Remember, this is an amount you said you could weather.

• Repeat this cycle, BUT spend 50% to 80% of every incremental marketing dollar on LONG-TERM ADVERTISING, not the ultra-aggressive stuff. I’m talking about methods like TV, radio, and direct mail campaigns designed to nurture prospects over a period of time. Essentially, you’re nurturing your 2015, 2016 and 2017 customers RIGHT NOW.
• This is how the big get big—they INVEST in advertising (Amazon, for example)… and how the small stay small—they DON’T.
• Keep doing this until you get to the $20,400 in extra budget you decided you would need to hit your goal of 25 sales. (Adjust for your own numbers.)

• IMPORTANT: Continue to spend the extra $20,400 a month in marketing, EVEN if you are only breaking even on it.

  The long-term nurturing advertising, by definition, is going to take a while to really start working. People need to see and hear your ads over an extended period of time so they come to know who you are, what you stand for, and have confidence you can perform.Over time, you will see your monthly sales climb, while your advertising budget stays static. Eventually—12 to 36 months, you will hit your Most Important Number. And you’ll hit it with a marketing budget that’s acceptable—15% or less.

The key is to be willing to invest in the future of your business right now in a smart, responsible way. It takes a little faith and patience. But tough it out, and you’ll soon find yourself exactly where you want to be financially.

Trust me!

© 2017, Rich Harshaw. All rights reserved.