Joy Gendusa: mapping growth Featured

8:38pm EDT September 30, 2011
Joy Gendusa: mapping growth

Can you afford to blow money on marketing?

I can’t either. With a staff of 192 employees, meeting payroll week after week and paying the bills is often stressful in this economy — even for a “big” small business like mine. Sometimes smaller business owners imagine that we have loads of cash lying around to test out new marketing ideas. Not true. The expenses grow with the revenue.

No matter what size your business is, having a well-planned and executed marketing budget is the key to making sure that you continue growing. If you don’t have a marketing budget, you leave yourself open to the trap of not promoting enough or blowing excess money on ineffective marketing. Neither of those will get you what you desire, which is a steady flow of business and revenue growth.

But how do you decide what your marketing budget should be? What goes into determining that perfect number? Well, it’s actually a little easier than you’d think.

Here is a simple three-step equation to determine your company’s ideal marketing budget:

1. Where you want to be

The first thing to do is get out a piece of paper and write out the letters A-D. Now, next to the letter A, write your current monthly revenue (average). For example, let’s say it’s $100,000. Next to letter B, write down your desired monthly revenue (average). Let’s say it is $300,000. So you want to add $200,000 of revenue per month. Now we find out what it takes to get there.

2. Where you are

Now, next to letter C you need to write down what you currently spend on marketing per month (on average). Basically, you need to know how much marketing it is taking to generate the business you have now. Let’s say it’s $5,000.

Once you’ve done that, divide A by C to find out how much each one of your marketing dollars is worth in terms of revenue. In this example, that would be $100,000 divided by $5,000, which makes the revenue value for one of my marketing dollars $20. This is letter D.

3. What it will take to get there

In order to get to my goal of $300,000 a month, I need to figure out how much to increase my marketing budget to allow for that growth. For that, take B and divide it by D. I would divide $300,000 by $20 to get $15,000. So, in order to take my monthly revenue from $100,000 to $300,000, I need to raise my marketing budget from $5,000 per month to $15,000 per month!

That may sound like a lot, but when you look at the payoff, it really isn’t that bad. The tricky thing for business owners is not to give up when marketing doesn’t seem to be working. It is an evolving process. Sure, you can change around what marketing you’re using to make sure it is the most effective. For instance, personally, I have always found direct mail to be the most effective medium for lead generation and growth. But whatever marketing works for you, you have to be willing to keep investing in your marketing budget — no matter what. Every dollar spent on marketing is a dollar that goes toward growth. That’s where growth comes from, and when it comes to your marketing budget, you can’t afford to blow it.

Joy Gendusa founded PostcardMania in 1998 with a phone, computer and no capital investment. Since then, she has grown the company into one of the nation’s most effective direct mail marketing firms, specializing in postcard marketing for small to large-sized businesses. Over the years, she expanded to offer mailing list acquisition, website development, email marketing — all while continuing to educate clients with free marketing advice. She has been named Tampa Bay CEO of the Year, Business Woman of the Year in Tampa Bay and has been featured on MSNBC’s “Your Business.” PostcardMania is an Inc. 500 and 5000 company and has won awards for creativity, best business practices and leadership. Learn more at www.postcardmania.com.