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Advertising Your Business • Discounts. • Yellow Pages listing. Pay attention to advertising and promotions for your business. How you spend your advertising budget is more important than how much you spend. Spend it wisely. Calculating Your Advertising Budget According to Work.com, taking the time and effort to calculate your ad budget will help you: • Ensure that you’re not wasting money by either overspending or under-spending. • Better manage your total budget. • Determine whether you need additional capital to build your brand (and how much you’ll need). • Learn how to measure return on your advertising investments. • View advertising not as an expense, but as an investment that ensures your company’s success. There are several different ways to calculate your ad budget. Many small businesses simply use a percentage of revenue as their guide for how much to spend on advertising. If you’re going to use this method, you need to figure out two things: what percentage, and what revenue Rather than generalizing (5 percent revenue) it’s better to use your industry’s average percentage as a guide. For the most accurate number, base the percentage on an average of the last few years’ revenues, or on the average of last year’s revenues and your projection of next year’s revenues. To find your industry’s average percentage of revenue spent on advertising, search the Dun & Bradstreet Web site, www.dnb.com/us/. The unit-of-sales method relies on your experience, plus averages for your industry, of how much it costs to sell a certain specific product. Determine the number of such products you want to sell, multiply that number (1000 widgets X five cents per widget) and you’ll get your total budget ($50). The unit of sales method works well for companies with only a few different products to sell, and for product lines with limited or circumscribed availability (an artist can make X number of carvings per year with one apprentice, for example). Your need in the unit-of-sales method is to get good key numbers — try your industry trade association. Search for it on the U.S. government’s Consumer Action Web site, www.consumeraction.gov/trade.shtml. Tie advertising investments to rent expenses. Entrepreneur magazine suggests an unusual way to calculate ad budgets, which should work well for retailers and others whose facilities play a role (any role, limited or significant) in their brand identity. The calculation, which is slightly too complex to repeat 54 Going into Business in West Virginia
Advertising Your Business here, will provide you with a very specific budget range. Use the tutorial, “A New Way to Calculate Your Ad Budget,” at Entrepreneur.com Web site, www.entrepreneur.com. Search for the tutorial title. Another way is to calculate your budget by task and objective. Although this method is the hardest one to use, most experts agree that it’s the most accurate way to come up with the right ad budget. It’s hard because you must first create a marketing plan. What are your objectives Rank them in order of importance, because you may find that you can’t afford to achieve all of them. Determine: 1) who you want to reach, 2) how frequently you want to reach them, 3) where (through which combination of media) you’ll get the best exposure, and 4) how much it will cost. Add it all up. Too much money Reduce your objectives. To use the task and objective method, you need a good marketing plan. If you need a marketing plan outline and want professional help, contact your local SBDC coach. Online tools make it easier. There are a variety of calculators online, geared to different industries. Just plug in your numbers and go! Want to figure out how much your advertising impressions will cost Marketing Today’s Advertising CPM (cost-per-thousand) calculator, http://marketingtoday.com/tools/cpm_calculator.htm is useful. Search engine marketers can figure out keyword ROI on the Marketing Today Web site, www.marketingtoday. com/tools/roi_calculator.htm. We should also mention pay-per-click. Nothing has made the analysts who work in the advertising industry happier than the rise of pay-per-click ads and other search engine marketing techniques, because it’s easy to measure their return on investment. For a great tutorial on measuring your pay-per-click ROI, or “return on ad spend” (ROAS) see Google Adwords Learning Center, www.google.com/adwords/learningcenter/. Tips and Tactics • Test your ads; measure the ROI; tweak them, and measure again. It’s the only way you’ll really know what works. • Trying to build market share You’ll have to spend more than the industry average percentage of sales on advertising. • Keep an eye on what your competitors are doing. Maintain a reserve ad fund for those times when you must respond to unusual or highly competitive conditions. West Virginia Development Office–Small Business Development Center 55
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GOING INTO BUSINESS IN WEST VIRGINI
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Table of Contents Chapter 7 Chapter
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Page 8 and 9: Getting Started Owning a business a
Page 10 and 11: Getting Started Personal Considerat
Page 12 and 13: Getting Started Notes 10 Going int
Page 14 and 15: Finding a Business Starting and gro
Page 16 and 17: Finding a Business • What are the
Page 18 and 19: Finding a Business Notes 16 Going
Page 20 and 21: Choosing a Business Location Your C
Page 22 and 23: Choosing a Business Location Before
Page 24 and 25: Choosing a Business Location 22 Go
Page 26 and 27: Deciding on a Legal Structure The f
Page 28 and 29: Deciding on a Legal Structure Disad
Page 30 and 31: Deciding on a Legal Structure perso
Page 32 and 33: Deciding on a Legal Structure partn
Page 34 and 35: Deciding on a Legal Structure and z
Page 36 and 37: Selecting Your Insurance At some PO
Page 38 and 39: Selecting Your Insurance What are t
Page 40 and 41: Selecting Your Insurance For furthe
Page 42 and 43: Identifying Your Market No matter H
Page 44 and 45: Identifying Your Market Generally y
Page 46 and 47: Identifying Your Market These ideas
Page 48 and 49: What have you done What are you doi
Page 50 and 51: Identifying Your Market Notes 48 G
Page 52 and 53: Advertising Your Business Advertisi
Page 54 and 55: Advertising Your Business 5. Don’
Page 58 and 59: Advertising Your Business Notes 56
Page 60 and 61: Financing Your Business Will YOu ne
Page 62 and 63: Financing Your Business Review and
Page 64 and 65: Financing Your Business Small Busin
Page 66 and 67: Financing Your Business There are o
Page 68 and 69: Financing Your Business The Renewab
Page 70 and 71: Financing Your Business Venture Cap
Page 72 and 73: Financing Your Business Some state
Page 74 and 75: Financing Your Business Also, work
Page 76 and 77: Keeping Your Books Why keep reCOrds
Page 78 and 79: Keeping Your Books Federal Income,
Page 80 and 81: Keeping Your Books BooKKeeping sYst
Page 82 and 83: Securing a Business License Getting
Page 84 and 85: Securing a Business License File a
Page 86 and 87: Securing a Business License What is
Page 88 and 89: Securing a Business License What if
Page 90 and 91: Securing a Business License Departm
Page 92 and 93: Securing a Business License Contrac
Page 94 and 95: Securing a Business License Notes 9
Page 96 and 97: Business Planning Why write a busin
Page 98 and 99: Business Planning Review the list o
Page 100 and 101: Business Planning Notes 98 Going i
Page 102 and 103: Finding and Hiring Employees How do
Page 104 and 105: Finding and Hiring Employees Job ap
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Finding and Hiring Employees The an
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Finding and Hiring Employees Center
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Finding and Hiring Employees Federa
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Reporting Taxes As an entrepreneur,
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Reporting Taxes To file, use the fo
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Reporting Taxes Warehouse “Freepo
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Reporting Taxes 3 SIMPLE STEPS If y
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Reporting Taxes Notes 118 Going in
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Using West Virginia’s Business Re
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West Virginia Development Office Sm
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