Most starting and early growth entrepreneurs are focused on costs. Shifting your mindset about marketing budget can change your results dramatically. These 3 questions help you do that.
The First Questions People Normally Ask
If you own a business and someone says you should use some powerful integrated marketing software that costs $800 per month – what is your first thought?
If an online marketing firm comes to you with a proposal to increase traffic and lead generation from your website and it will cost $4,000 a month for a minimum of a year – what is your first thought?
In my experience, the first thought of most starting entrepreneurs have is some variation of:
- “Wow, that is a lot.”
- “I can find cheaper options.”
- “Do you have a less expensive option?”
The first concern is cost.
Price is important to a degree, but it should not be the first concern.
Sadly, being an entrepreneur for many years does not automatically change this perspective. It usually changes when the owners go through enough growth to stop seeing every dollar as coming out of your personal pay cheque. This transformation happens in fits and starts when you have enough people and complexity that you are forced to delegate some of the money decisions. Or you consciously adopt a growth mindset.
How Business Investors Think Differently
Once you get past trading time for money, business is about investing resources to generate future revenue and profit.
This shift isn’t to downplay what you do or how you create value. But underneath all that, money works the same in nearly every business. A healthy business is better able to have a positive impact on the world whether you are Elon Musk or a person with a small consulting firm.
Consulting firms and other professional service companies often have a harder time with this transition because they are built around maximizing billable hours. If it is not billable client work, it is an expense.
I think it is the deferred reward part that makes it harder for entrepreneurs to cross this mindset chasm. Our brains are wired to go for gratification now rather than take a chance for a bigger reward in the future. So business owners balk at investing sufficiently in growth and therefore, stall or delay their growth.
No judgment here, I’ve been in that mindset, so I get it.
I also understand that you can’t get blood from a stone. It is easier to spend more if you have more. Except that it is not entirely accurate. Unless your mindset changes, you won’t invest more. You will just take more money home over the short-term and lose out on bigger gains later.
When determining your overall product and service vision, you need to start with questions like “will it serve?” and “what is the impact on people?” Once you are beyond that, you need to start with questions around results.
The First Three Questions About Marketing Budget
For almost any business growth or efficiency initiative, you should be asking questions like this first. If the online marketing plan works:
- How much new revenue could that generate?
- Will that help me reach my goals faster?
- How long will the investment take to pay for itself and start making a profit?
These questions should address whether or not the impact of the investment is significant enough relative to the outlay to be worth considering.
Only after that should you focus on risk and price. In all cases, you need to evaluate investment costs relative to the returns and risk – not in isolation.
The reason to do it in this order is to stop fear and risk concerns from affecting your judgment and paralyzing you from taking action. This exercise gets you past the expense mentality and into the investment mindset you need to thrive and get your venture into sustainable growth.
When your investments generate sufficient returns, you can ramp up growth and worry a little less about pinching pennies at the expense of making dollars.
If increasing your marketing budget generates greater revenue and profit, why would you worry about keeping it small?
What to learn more about measuring return on marketing investment? Check out the free eBook.