Your Marketing Plan Is Meaningless Until You Assign A Budget

Oh, how you love to talk about planning—your business plan, financial plan, vacation plan and what I think is most often discussed—your marketing plan.  Congratulations to you if you’ve drawn up an official marketing plan for your venture.  But if you intend to transfer your plan from the page to reality, you must assign it a budget.  Somehow, that practical reality is sometimes glossed over.  Ask a Freelancer or business owner what the company’s annual marketing budget is and you’re likely to be met with a blank stare or incoherent stammering.  That is not the ideal response, my friend! So today, let’s learn how to estimate a reasonable budget for a B2B annual marketing plan.

Laurel Mintz, founder and CEO of Elevate My Brand, a Los Angeles digital marketing agency, has developed what she calls “marketing math,” to help her clients determine what would be  a realistic B2B marketing budget range for their organizations.  According to Ms. Mintz:

New companies in business for one to five years would be wise to allot 12 – 20 % of  gross or projected revenues on marketing activities.

Established companies in business for more than five years are advised to commit 6 – 12 % of gross or projected revenues to marketing activities.

Those figures seemed rather hefty, at least they did to me and maybe you agree.   According to Laurel Mintz,  if a new business generates just $35,000 in after-tax bottom line revenues, she nevertheless feels that the owner should devote $4,200 – $7,000 annually to a marketing budget.  Ouch! I mean, how does one pay the living expenses and taxes and health insurance when in the salad days of a start-up?

Think of it like this—no one said that self-employment, whether Freelance solopreneur or entrepreneur, was going to be either easy or inexpensive.  Just like you set aside money for other vital expenses, marketing deserves a budget, too, because without marketing you could wind up presiding over a stunted venture that never gains traction and never fulfills its potential.

Marketing activities, whether innovative or predictable, give the venture a needed push into target markets.  Marketing promotes the expansion of prospective clients who will flow into the sales funnel, distinguishes the organization from competitors, establishes and promotes the brand, justifies the pricing structure and keeps the enterprise at top of mind and positioned to beckon clients and referrers.

Now for the cold water—there are no guarantees in marketing and the ROI is notoriously tricky to quantify.  But realize that marketing is all about testing and that means (calculated) risk.  If you approve a certain sum of money to devote to the year’s marketing activities, you might achieve all of your marketing campaign goals, or do twice as well, or only half as well as you projected

Risk is real in marketing, but it’s mitigated by your awareness of how your clients have been known to respond to the marketing tactics that you can afford.  Research shows that if you conduct marketing  activities that resonate with your target clients and are within budget, then over time,  the marketing campaigns will enhance the bottom line and your brand.  Treat marketing activities as an investment that will surely pay off and allocate funds each year.

Marketing  campaigns are all about planning, budget and execution.  If meager finances make you feel that the budget formula given here is too risky for your venture, then focus on planning and execution and roll out “sweat equity” campaigns that utilize tactics that cost time instead of dollars, such as content marketing, face to face networking and social media.  Just do it.

Thanks for reading,

Kim

Director and actress Ida Lupino on the set of The Hitch-Hiker (1953)                    Photograph courtesy of RKO Pictures/ Photofest

 

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Budget Plan: The Unexpected Windfall

Now check this out—what if Santa Claus comes to town and leaves a nice financial windfall under your Christmas tree? What a sweet surprise! You took a chance and competed for a very lucrative assignment and by some miracle, you won.  Along with making sure that you’ll deliver, if not surpass, your new client’s expectations, you should as well think about how you can most effectively utilize the proceeds from the billable hours.

Most often, we approach the subject of financial contingency planning from the negative side and prepare ourselves for unexpected expenses that could ruin a budget or seriously deplete our savings.  But why not manifest prosperity and think about what you can do if your ship comes in? Here’s a sampling of where extra money can be applied:

Erase debt.  Without a doubt, pay down and pay off all outstanding debts.  Interest rates are at loan sharking level and eliminating the burden will increase your credit score and decrease your stress level.  If you are not in debt, then pay ahead monthly installment obligations such as health and auto insurance policies or renewable business licenses and certifications.  Payment of these types of accounts payable is recorded as an asset on your Balance Sheet.

Professional development.  Are there continuing education workshops and courses or certifications that if acquired stand to enhance your stature and brand? Is there a conference that not only provides good business information, but also excellent networking opportunities? Explore how you might be able to raise the bar on your qualifications and make yourself a more employable Freelance consultant.

Business investment.  Maybe your billable hours are sufficiently generous to allow you to buy a new car? Ask your accountant or business attorney if the proposed new automobile can be designated as a company vehicle and permit you to write off some portion of the expenses plus depreciation, so that you could sweeten the investment.  You might also consider computer or other technology upgrades, or office equipment such as a new desk or an ergonomically correct office chair.  Much smaller but still significant branding upgrades include personalized business note cards, holiday greeting cards, stationery and your invoice statement.

Retirement account.  Fund your retirement account to the maximum annual amount with pre-tax dollars.  If you have extra money, open a Roth IRA account in tandem with your primary retirement account and enhance your financial future with after-tax dollars. Verify first the financial guidelines required for simultaneously holding these two retirement funds.

General savings. You might also meet with a wealth manager, if you meet the investment minimum and can find someone who can be trusted.  Alternatively,  on your own you can research and invest a couple of thousand dollars in a mutual fund that is indexed to the stock market and watch it grow (and it will, despite some ups and downs along the way).

Splurge.  Oh, go ahead! When’s the last time you took a wonderful vacation? Freelancers work so hard and we worry so much about how we will be able to satisfy our clients, find new clients, win back lapsed clients, generate relevant content marketing, distinguish ourselves from our many competitors and on and on.  I don’t know about all of you, but I am so exhausted it’s absurd.  I’ve been able to take brief local vacations, but I dream of taking two weeks or even more in Marrakesh, Morocco. Or Bahia, Brazil. Or Shanghai. Or Rome. Or Tokyo. Or Buenos Aires. Mmmmm….!

Thanks for reading,

Kim

2Q Pep Talk and Organizing Primer

Hello there, Freelancer and welcome to second quarter 2015. As a precaution against slowly sliding off-course, let’s take a look at some Freelance consultant basics that will keep stress at bay and you in the mood to work hard and smart to achieve your goals of business success, as you define it. Free or low-cost technology can help.

Budget your income

Poor financial management = sleepless nights and stress.  Your paychecks are irregular and taxes are not withheld.  Check stubs and business expense receipts can be misplaced, making it difficult to track accounts receivable and payable.  How you keep track of your revenue/ income is your choice, but keep track of it you must,  along with deductible business expenses. An Excel spreadsheet is your level one financial management tool.  Whenever you receive a revenue check, get into the habit of recording the payer, amount and date.  Save the check stub as well and keep them all together in a place that you’ll remember. Record also your accounts payable business expenses and save the receipts alongside the revenue checks.

If you are in the mood to pay, Intuit has two choices for you.  QuickBooks is the gold standard of bookkeeping and basic financial management for business ventures large and small. QuickBooks will produce income statements and balance sheets monthly, quarterly and annually and make sure that you know where you stand financially.  For about $10/month,  through a basic QuickBooks app on your smart phone or tablet, you’ll be able to download transactions from your bank account and credit cards; separate your business and personal spending; track all of your IRS Schedule C Profit & Loss From a Business variable expenses; calculate and pay estimated quarterly taxes; do it all with the same security encryption as your bank.

Intuit’s Mint will pull together all of your financial transactions and arrange in colorful and easy-to-decipher graphics that depict your financial picture. Get started for free and add your accounts. Mint will analyze all of your financial transactions: checking and savings account activity, credit and debit card activity, investments like brokerage and retirement accounts, and IRA rollover offers and will make recommendations as to how you can pay less, save more and earn more.

Mint will essentially do your budgeting for you, by calculating your average spending by category so that you can create a budget based on an accurate assessment of your spending patterns.  This is the way to create and achieve your savings goals, whether for retirement, for a home, or vacation.

Manage your time

Recognize and respect priorities and refuse to allow the time-suckers to take over your life.  Time is totally money for Freelance consultants and we bill by the hour, or on a project basis. Do whatever you can to devise and approach your to-do list with good time management in mind. At the very least, keep a written calendar in which you can see a monthly view of your appointments (it is superior to a weekly view). Record your obligations and the due dates, so that deadlines will be met. On your smart phone, make use of the Notes app, so you can easily jot down important dates or deliverables.

Evernote is a very handy technology tool that works on your desktop or laptop, tablet or smart phone and costs between zero and $10/month. When you’re working on a project, your notes can even be transformed into a screen-friendly graphic lay-out that works for a client meeting. Access attachments, including PDFs, all your notes and images, too. The details of your project will be easily available and readily organized. You will look so professional and in-charge!

Thanks for reading,

Kim

Seven Resolutions for 2011 Part 1 of 2

Happy New Year!  You had to see this coming,  so here we go with the resolutions.  We’re at the top of the year and it’s a time-honored tradition to look forward and plan to succeed.  I hope the list that I’ve pulled together inspires you to get busy.

1.   Set financial goals  

Whether you’re 35 or 55,  financial goals are a must.  Establishing these goals as a Freelancer presents a  unique challenge,  because our incomes are often neither predictable nor secure.  A fickle revenue stream makes adequate planning even more of an imperative.  We must get our arms around the money thing and take as much control as possible.  Our ability to live a comfortable life throughout our lives depends on it.  The idea is to avoid going broke,  especially in the elder years.  Those with a  steadily employed spouse have a huge financial advantage,  while those who are single or married to a fellow Freelancer have more variables and hence  a more challenging mountain to climb.  Consider what you want your balance sheet to look like in five years and make an appointment to discuss your financial wish list with your accountant.

2.   Develop a budget  

You may be expert at monitoring and tracking expenses,  but developing a budget encourages one to anticipate the year’s fixed and variable financial obligations,  as well as revenue that is likely to be generated.  One budgeting objective can be to prepare for the inevitable peaks and valleys in a Freelancer’s revenue stream.  When do you typically bill the most hours and when the least?  Which annual conferences do you like to attend,  when and where are they held and what is the cost?  Where and when is it (or might it be) advantageous to advertise?  Have you been mulling over the idea of making upgrades in certain of your marketing materials?  What about your credit needs—do you need to apply for another card to help float strategic expenses,  or can you cancel one?  When can you make contributions to your retirement fund and what should that amount be?  Can you take a vacation this year,  when can you take it and how much can you spend?  The idea is to figure out how to pay for what you must do and also cover a couple of items from your wish list,  to reward yourself.

3.   Review business priorities  

Should you form a strategic partnership,  to give your business entrée to a new segment of your market?  Should you aim to sign more new clients,  or focus on obtaining repeat business from previous clients?  Or would it be wiser to try wringing more billable hours out of your current roster?  Which clients might be most amenable to which strategy?  Also,  should you do more teaching and/or speaking this year? Which institutions will benefit your reputation and client list the most?

I’ll be back to complete the list of resolutions next week. 

Thanks for reading,

Kim

Mind Your Budget

As you brainstorm survival strategies for yourself and your business, creating a budget may be a good item for the to-do list.  A good budget can help you manage costs, understand where your profit centers are (and are not) and most of all,  let you know if you’re really making money and if so, how much.

For Freelancers, the temptation is to simply add up the 1099s at the end of a quarter or year and assume that tells the story. Yet there are always costs of doing business and it is very important that we know where, how and for what purpose we are spending our money.

Do you really need to rent office space?  Is it necessary for clients to visit your office, or might it be perfectly acceptable for you to go to them?  What is the ROI on the networking events that you attend?  Be strategic and selective about the rooms you pay to enter and go to events where you get the most bang for the bucks.

After you’ve been a few times and met a few people, try cutting back to bi-monthly or even quarterly appearances.  If you want to keep in touch with colleagues in between, invite them for a coffee.

Tally your gross revenues and cast a cold eye on expenses. These are the foundation of any budget for any business, or household for that matter.  Managing expenses has a huge impact on the bottom line.  It is possible to lose money overall even if sales are strong, because you either spent too much (money or time) to make the sale or overspent on other operating and production costs.

So if you make and sell jewelry, for example, watch how you buy the raw materials.   Do you have the best available sources?  Should you buy more and stockpile inventory in order to get a better price? Pay attention to market fluctuations and buy big when prices drop.   Managing the cost of goods sold adds to your profit margin.

On the expenses side, be sure to divide fixed expenses (rent, salaries, utilities, long term payment obligations, etc.) from variable expenses (sales commissions, advertising, travel, etc.).  Make note of seasonal fluctuations.  Does business slow down in July and August—or pick up? Identify where you can trim expenses or negotiate a better deal.

Once you’ve figured out the money coming in and money going out over the past 2 or 3 years and assessed where you are,  you can then decide what financial targets you’d like to reach.   Maybe you want a certain overall profit margin on goods sold, or perhaps you’d like to have average net quarterly earnings of a certain amount?

While you’re analyzing gross revenue,  you may even discover that spending a little money will make it possible for you to make much more.  For instance, hiring an assistant at $18/hour to answer the phone,  send invoices,  deposit checks,  post transactions into a ledger or help make jewelry in preparation for Christmas or Valentine’s Day can give you more time to network,  prospect,  make sales calls or double your output of jewelry available for sale.

Especially for Freelancers and other sole proprietors,  how you spend your time can be factored into the budgeting process.  Digging into your company finances may just turn up some buried treasure.

Happy Thanksgiving!

Kim