Ask the experts

Do you have a burning question that you would like the answer to? Or maybe you’re looking for some advice to help your business? In each edition some questions will be shared and answered by some of The Business Bulletin experts.

Q. How much should I spend on marketing?

A. I suppose the easy answer is that you should look to 8 – 10% of your turnover being re-invested as marketing, but the more realistic answer is that it will vary depending on your circumstances. Spend as much as you can but no more than you can afford.

Certainly never throw money you don’t have at marketing in hopes of a short term return (that’s not how it works) but never stop marketing under any circumstances.

Kevin Robinson, 13 Media

A. When it comes to marketing budgets, it depends a lot on the results you want to achieve and the budget you may have set aside.

I have heard that you should be investing about 10% or more of your turnover into marketing. It’s important to also decide what marketing will have the most impact if you have only a small budget and want to concentrate your efforts. Keep in mind that when you are doing stuff yourself, although you are not paying money out, it is taking up your time that has a value and would be better to outsource to a VA.

Whoever you work with in marketing, make sure to look at testimonials, case studies and examples of work. Give the process at least a couple of months.

Marie-Louise O’Neill, Lovely Evolution

A. Where do you want your business to be? What’s the overall goal? And how many new clients do you need to bring on board in order to achieve that? How much is it costing you right now to acquire the clients you’re getting?

If you know all of that you’re able to work out what your new budget NEEDS to be. (Essentially cost per acquisition x number of new clients = £££’s) We need to remember however that it really isn’t as black and white as that! We all have different products, services, price points etc. For some it takes a week to convert a prospect into a paying client for others it could be 6 months. Use this figure and plan to grow your marketing spend. I’d always suggest stepping things up bit by bit rather than launching into a mass of marketing ‘stuff’ all at once.

If you turn marketing on and off, on and off like a tap – it’s a cost. If you plan and maintain activity with consistency, it’s an investment. Your business will have a level of tolerance for this additional spend, so you need to consider a whole host of things and plan your activities so that you don’t overstretch and waste the money you’re spending.

When we look retrospectively at a P&L, marketing costs would hopefully come in around 10-15% of revenue over a 12 month period. With that in mind, it might be worth looking at what you have spent versus what you could/should have spent over the last 12 months. If you’ve spent less than you could have done, you now have an idea of the minimum you can afford and can plan accordingly. If a client is looking at investing their entire marketing budget with me, I look at things from both of these angles. The 12-month P&L and the calculation above and we decide on what’s manageable from there.

As for where you should invest your money – that’s easy. Don’t spend it where you want to hang out. Spend it where your ideal client is hanging out. Focus there and use it to leverage attention, to build relationships, to drive traffic to your website, to build your email lists. Spend your marketing budget on servicing your prospects and cementing in their newsfeeds, inboxes, and minds that YOU are the solution they need!

Christina Robinson, Green Umbrella Marketing

A. It depends on your budget, but equally you can temper your expectations to whatever budget you have It wouldn’t matter if I said I could guarantee (I can’t by the way) to double your investment of £1m in a marketing idea, if you don’t have the money to hand. But if there is a good chance that £50 will result in at least one customer that is worth £1500 then that could be a worthwhile experiment. Equally, if £5 invested in marketing had a small chance of landing that same £1500 client then you’d probably take no time at all thinking about it.

Some ideas are going to be more of a ‘punt’ than others because it’s perhaps a new market or the data is lacking, but it is all about risk vs potential reward in the end. And some of this will have stronger historical data, and more certainty than others. Wherever possible measure and keep an eye on results as this can help with future decisions.

Mark Coster, Pixooma

Q. Networking doesn't work for me! I’ve been to a few meetings and haven’t generated any leads – so what’s the point?

A. Then you’re doing it wrong, or in the wrong places. There must be a few examples, but I struggle to think of a business that couldn’t benefit from some form of networking.

People do business with companies they ‘Know, like and trust”. And networking is simply another way of getting to know each other and starting that journey. But it takes time, and it’ll depend on your sector and niche as to exactly how long. But a relationship that is built up over time through networking will be as strong and long-lasting as they get. If it hasn’t worked so far consider this:

1. Have you given it long enough?

2. Are you there regularly enough?

3. Are you trying to join the group and contribute or are you just trying to sell (hint: don’t do that)

4. Are you giving people enough of the right information to be able to refer you (or become a customer)?

Finally, it is important to consider that it is not just about the people in the room, it’s about who they know. And it can be very surprising who people have in their contact lists. You’ll only find out by being active in the group(s), being helpful and honest and contributing regularly – because this will increase the chances of them ‘knowing, liking and trusting’ you enough to give you access to their trusted contacts.

Mark Coster, Pixooma

A. I think that people who don’t get work from networking (in some shape or form) aren’t doing it properly or expecting quick results for little effort. Many networking groups provide training or support in getting the most out of networking, and there are plenty of old hands about who’d be happy to share their learning. If you generate work from ‘a few’ meetings then you’re very lucky. You need to go through the ‘visibility, credibility & profitability’ stages. Visible means people actually notice you and have a slight understanding of what you do, credibility is where they understand what you do and would possibly refer to you, profitability is when you’re actually getting referrals.

James Tarry, Scottsdale Moneywise

A. Networking certainly isn’t an overnight success and isn’t for everyone. It’s certainly a time commitment, is all about building relationships and trust.

So many new businesses enter the world of networking expecting to get sales from the off.

If you are going into a room for the first time get rid of the hard sales pitch and become a people’s person. Build relationships, make friends, pay attention and an interest in those you are speaking to. You may have an accountant already but that doesn’t mean the accountant in the room hasn’t got your ideal client on their books.

The old saying of “It’s not what you know, it’s who you know” is very true when it comes to this form of marketing and if I can give you advice it would be – Your Network is Your Networth as you never know when that person may come in handy.

Charles Jones, JPAD UK