At just about every business event I’ve been to this year, one theme keeps coming up. That theme is the notion that as a business owner, you probably aren’t marketing your business enough.
I’ve also seen several colleagues posting about this. I was recently perusing my Facebook feed when one of my friends (and amazing business person) posted the following, “He who spends the most money on marketing gets the most business.”
If you look at my accounting, you’ll see most of my money goes toward marketing. After seeing the results, I would have to agree with my friend. Here’s how to determine how much money you should spend marketing your business.
Where are you getting the most bang for your buck on social?
When it comes to spending money on marketing your business, I’m a big fan of the Pareto Principle. This is the principle that states how 80 percent of effects come from 20 percent of causes.
What does this look like in marketing your business? It looks like spending the most amount of money on what is actually bringing results.
For example, right now Instagram is huge for me in terms of getting people to opt-in to my email list. The reason this is important is because most of my sales come from email marketing. That being said, I’m spending money by hiring someone to manage my Instagram account and grow my following.
A quick note that social is constantly changing. A year ago, Pinterest was getting me the most results, so that’s where I spent the most money. After they changed the algorithm and the results changed, I stopped spending money on Pinterest and moved the money elsewhere.
Where does most of your business revenue come from?
In the previous section, I stated how most of my sales come from email marketing. Now, what exactly does this mean for marketing your business?
It means you should be spending money on the things that bring you the most money. In my case, that looks like spending marketing dollars on tools that actually have good deliverability rates.
Here’s another example. My group coaching program is extremely successful revenue-wise. This means I also spend money on a system that allows me to manage an affiliate program so current students can earn a commission for recommending the program to their friends.
Because I already know this about my business, I invested in an all-in-one system where I can manage e-commerce, email marketing, and affiliates from the same place.
How to Determine How Much to Spend
The last part of this equation is to figure out the budget for marketing your business. In my case, I’ve bootstrapped my business from day one. As my business earns more revenue, I spend more money on marketing.
That being said, if you’re just starting out, it’s okay if your budget is small. The important part is that you allocate something toward marketing your business.