Whether they sell surfboards or tax services, there is one universal concern on the minds of all small business owners - money. How to get it, how to keep it, and how to spend less of it. In a lot of ways, this is the mantra of survival in a business world wrought with failed start-ups and heavy competition. While generally keeping costs low can lead to better bottom line, spending money on advertising is one area where cost cutting has the reverse effect. After all, having the best product on the market means nothing, if customers don’t know it’s out there.
The Small Business Administration (SBA) recommends that small businesses invest at least three to five percent of annual revenue in advertising. This is a great starting point, but keep in mind the amount and type of advertising that is appropriate depends on the individual business and the type of competitive environment it exists in.
Some small business owners decide that they can’t afford to advertise. The truth is they can’t afford not to. Advertising is one of the few expenditures that has the ability to create long term financial return to the business. In fact, when done right, advertising will be the most profitable investment a small business makes. Furthermore, effective advertising doesn’t have to be expensive. Being creative or using a low cost approach can generate positive results and increase revenue.
Advertising dollars, unlike traditional expenses, are designed to grow revenue. Just as money placed in stocks or bonds, money spent on advertising initiatives should be primed to generate revenue greater than the initial investment. As with financial investment theories, the variety of advertising options is evident in the hoards of literature, seminars, and guidelines devoted to it. Experts dole out tips on how to best invest your advertising dollars. The operative word here is invest, because that’s exactly what advertising is - an investment. It is important to treat it that way.
To begin the investment process, businesses need to first establish an advertising budget, then determine how the money will be spent. Here, it is important to use the same researched approach that would be warranted by any other investment decision (think capital investment or stock purchases). Start by researching the market, consumer, competition, advertising channels, and costs. Choose the best investment for your company and track the results.
There are a lot of options and a variety of strategies to consider. It may take a few tries to figure out what offers the greatest return on each advertising dollar. If you aren’t confident making these decisions alone, contact a professional. The approach is up to you. What works for another company may not work for yours and vice versa. But, keep at it until you find the combination that works best.
No matter the size of the budget, the approach, or the industry, the key to success is remembering that advertising is an investment in the future of your business. Be diligent about your investment and it will provide unparalleled returns in both visibility and profitability.