How much to spend on advertising?


#1

I have heard you should be spending roughly 10% of revenue on advertising. Does anyone adhere to this, or have another figure?


#2

I don’t know about those ‘rules of advertising’ but I do know this. If an ad works (pays for itself plus extra on top), keep doing it.

I mean, if you cap off your advertising budget at a particular percentage and business slows down, does this mean you won’t put out any more ads because you maxed already?

Or are you asking if 10% is considered a success if that’s how much you need to part with for your advertising budget to have a profitable business?


#3

I don’t adhere to this, myself.

And I don’t really have a budget, either, because as Beautiful said, if something’s working, you want to keep throwing $$ at it.

How many $100 bills would you buy if you could buy them all day long for $80 ? And how many would you buy tomorrow and the next day for the same price?

Throw the maximum $$ at marketing & advertising that continues to produce measurable and profitable results.


#4

A budget is great… if we know what the heck we are budgeting for. Almost all of us fly by the seat of our pants with advertising. Not much theory is present other than “I need some cash” for most.

There is only 2 ways of growing a business- Advertising and innovation. Now unless we have done something newsworthy, we must rely on advertising.

To be honest, 10% is chicken feed and will squash the dreams of those not hearty in will. I would say that a start-up needs to spend even more. Maybe 30-40%.

You are probably thinking “A-hole, how do I live?” Get a job doing something else, get a loan, set up a lemonade stand. You do whatever it takes. This is business and it is uncaring… it can be massively rewarding or put you in a box under a bridge. It does not care which way you go, which means you must take massive action.


#5

p.s. the key is to set a marketing budget you will not fall [B]below[/B] every month.

it is not how much will I need to spend, it’s how much do I want to make.


#6

We operate companies that deal with repeat customers, it sounds like there are many small businesses here that have been operating for a few years. I feel if you are a small business and have been for a few years shouldn’t you already have a solid customer base?

Unless you are looking to become as large as possible, you will always need to sell due to high turnovers of customers.

I advertised for the first 3 years and have not needed to for the past 7 years because I was able to build a solid customer base that supports the work load for 4 employees each year.

I believe a small company generates a much lower turn over of accounts and employees.


#7

Well, speaking only for myself. I need to grow. If I were only to “maintain” enough work for 3 or 4 guys every year… I would fail at what I most deeply want- Enough work for 30 guys!

Anybody who does not advertise, does not want to grow. After we go to the well (our current customer base) then what? Sit and wait?

I know I am the type that has been labeled "greedy’, but this is business and it is 100% about money.

Some may not care to grow, or too cheap to grow, or too lazy to grow. But none of those fit what I want to do, and I feel there are a lot of people on here looking to maximize their growth potential.

That will only be caused by advertising.

Small companies have less turnover only because there is less to turn over…


#8

I agree with all but the last statement (in a manner) – I have always viewed turnover as a percentage rather a raw number (managed with an IT call center help desk – they burn-out in 12-18 months, typically.) There may be other factors in play regarding “less” turnover at small companies (e.g. relationship with owner, greater buy-in atmosphere, etc.) BTW, I have no employees.


#9

You would figure the turnover rate by a percentage.

That is common sense really.


#10

I really cant imagine a disagreement on this but here goes.

Small company either commercial or residential has a much better relationship with its customers if an owner directly services the accounts allowing a more personal service which gives customers security. My customers know who is in their homes and businesses, the job will be completed without problems or poor quality. Also can charge a higher rate because this service is more valuable to my customer.

A large company loses HIGHER PERCENTAGE of jobs due to less supervision which leads to quality issues especially when an employee unsupervised has a incentive (commission) to get the job done faster to make more money.

As far as not wanting to grow- I office from home, my 3 soon to be 4 children never have been in a daycare ( huge benefit) as my wife is able to be home, she deals directly with our customers, taking calls,scheduling, payroll,prepares records for accountant, etc…As I work in the field with my customers and crew each day. Our schedule is set in Jan. and booked thru Dec. This allows me to know my work load for the entire year so I can plan accordingly for employees. My total sales are very solid and work 9-10 months a year- get paid for full 12. I am very happy with this and make awesome living.

I can honestly say customer complaints can be counted on one hand. I have a stress free environment. Kids are raised,by their parents and if I need to leave work or get off early I can do this.

I love working in the field and do not want the office job. I could easily get more accounts but with more accounts comes more employees and I personally cant oversee each job site and chaos happens and then I am running around doing sales and fixing problems on jobsites and am stressed.


#11

I thought the discussion had turned to employee turnover, not customer turnover.

Isn’t less supervision (training/quality) typically a management issue?

Sounds as though you do. How does your net relate to your sales?


#12

I believe you know exactly what I am getting at and are just trying to be your normal difficult self.

As far as what I generate in sales I only employ 3-4 seasonal employees and office out of home my expenses are very low which leaves a very good income.

I am just saying why make life harder for me and get larger when my current income is very satisfying and is stress free.


#13

No disagreement here – to each his/her own.


#14

I recall a post about burn-out.

Business is NEVER stress free.


#15

CFP, you are correct I should not have said stress free. As That job doesn’t exist. Basically I think people can understand where I was going with this.

Well wait… llaczko should I explain this further for you?:slight_smile:


#16

Superior,
You just took the words right out of my mouth! This is a well written post that comes from a real business owner. You’ve been there and done that- just like myself.

Steve


#17

I agree with parts of that post also, however never growing beyond is not good business. If keeping in sync with our customers is an issue,… easy fix. Delegate a customer relations person. (no whining about extra costs)

The answer to the whole “not enough supervisors to ensure quality” is an easy fix. Ask Chris if it can be done. He has a good system in place.

Those who have not done it, cannot condemn it. If you tried and had these types of things happen, likely the system in place was faulty.

There does not need to be more headaches with having more business, and as we all know… there are a lot of headaches already. I might as well be going to the bank.


#18

Was it Gerber or Kioyski that said, "if you have to work[B] in [/B]your business and not [B]on[/B] your business, it’s not a business… it’s a job. Business’ are self sustaining through Standard Operating Procedures or Systems.

Right now I have a job. I too one day hope to have a business.


#19

I agree with some of that Louie.

I may re-phrase it to say “I [I][B]own [/B][/I]a job”, since being the owner still requires some work on my part.

I am working towards “owning a business” in this sense of the word, and being in a position where it is maintained by it’s systems, and I simply receive the check at the end of every month, without a moment of my intervention.

I would like that. Although I am fascinated by marketing, and will likely keep doing this for my business until the cows come home.

And of course, I am also more and more passionate about helping others build successful window cleaning businesses, and am of course developing many tools along that line as I speak…in addition to the site of free tips that I’ve already launched.

But I hear and agree with what you’re saying, for sure. It sounds impressive to say we are “the owner”, but if you still have to do a bunch of work stuff regularly, big deal.


#20

If I am not working… I am dead…

I work… therefore I am.

The keywords… [B]work on[/B] my business instead [B]working in[/B] it.

When it comes to advertising… I think we are shooting for the same target as moderately high end furniture stores.

There is a furniture store here in OKC. They started out as a mom and pop maybe running $30-$40k per month. Now they do over $30million per month. The growth of this family business over the last 40 years is directly proportional to the 20% of their gross income that religiously went into their advertising budget.

20% is their rule and is now mine.