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Small Potatoes
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I saw a thread the other day that had Flyboys cost calculator in it. I've been trying to find it but can't seem to locate it. Any body know the thread or if Flyboy could post it again that would be great!
Send me a PM with your email address and I'll send you a new and improved Excell, plug in the numbers, cost calculator with instructions.
 

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How much money should you put for marketing & advertising to achieve this 1000 hr min working hour that these calculations are based upon?

And where do you spend it to assure these hours are met?
Now this is the question of the year.

If I had 1,000 billable hours I would be like super duper rich :laughing::laughing:

I've experimented with different forums of advertising that I could afford as a tiny company. I've come back to SEO for the website and decided to put more money into that to have a professional do what I can't.
 

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Small Potatoes
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How much money should you put for marketing & advertising to achieve this 1000 hr min working hour that these calculations are based upon?
I don't think there is a hard and fast rule here to tell the truth. It's all about what type of work your doing, how long you've been in business and then just budgeting a percentage of sales into your pricing formula.

If I were just starting out I'd probably try budgeting 6 to 8 percent toward marketing.

You'll need to back into the number. Let's say you calculated a $275/hour labor component (based on a 50% efficiency) into your flat rate formula. 1,000 hours a year x $275 = $275,000/yr. in sales.

$275,000 x 7% = $19,250/yr. budgeted toward marketing. Go back and add it back into overhead for the adjusted billable hour number (or day breakeven number) to cover it in your pricing.

$19,250 divided by 12 months = $1,604/month in advertising dollars (SEO/ad words paid or organic). This does not mean you have to spend it, it just means you shouldn't exceed it.

You should be looking (asking) for referrals, marketing to existing customers, networking, bla bla bla to keep the marketing expense down.

Track your advertising the best you can to get the most bang for your buck.

And where do you spend it to assure these hours are met?
I'm with Hack on this one. Easy to track too.
 

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So what your saying is, $19K in advertising will gross $275K in sales, for new guy just starting out?


I doubt it very much, but it depends on what your area of business is, I guess..

For a new company starting out, I would suspect 25% of your sales need to go to marketing, and then drift downward from there once a customer base is built. For a business with no continuous customer base, your marketing might run 15-20%, depending on your business you're in.

No?
 

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I could see a new guy starting out spending 100% or more of sales on advertising, depending on how much capital he started the company with.

When I first started, I did most of the website and SEO myself to keep the cost down while slowly gaining customers. I also brought referrals with me from sidework customers I had over the many years before I opened the legit business.
 

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Ya but when most people are starting out they rarely have any money to spend on marketing so they need to start somewhere. The budget gives a good idea of what should be the max.
I have been told 10% but know companies that are n rapid growth mod that spend up to 20% of revenue.

We aim for 10% but it tends to fluctuate 9-12% depending on the months final revenue.

Track track track. How else will you know what is really working or not.

I wish we had started using tracking phone numbers a long time ago. Its not expensive.
 

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Small Potatoes
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So what your saying is, $19K in advertising will gross $275K in sales, for new guy just starting out?
It's just a WAG...When I started out the most I spent over the first 10 years was around 10% per year. I do remember one year we spent 13%.

In our 28th year, 2013, we spent just under 4% of sales.

I doubt it very much, but it depends on what your area of business is, I guess..
FWIW, I'm in a rural area. Upstate New York, the Hudson Valley.

For a new company starting out, I would suspect 25% of your sales need to go to marketing, and then drift downward from there once a customer base is built. For a business with no continuous customer base, your marketing might run 15-20%, depending on your business you're in.

No?
I don't think so. Somebody ain't getting paid if your spending that much on advertising.
 

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When your gross sales for the first quarter is $947, it's hard to stick to only 8% for advertising and marketing :thumbup:
I would say your advertising is not working. You should have advertising in your start up costs. Things like business cards ,door hangers and a web site are a good start. check out Roy Williams The Wizard of Adds it is a good read for setting up an advertising strategy .
 

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Yeah, the owner :laughing:


But what other choice do you have when you are just starting out?
your start up was under capitalized. don't wait for the work to come to you you need to go after it. Go to "work" every day.
Shoe leather marketing costs very little. Spend eight hours a day for one month just handing out cards to every business in your area and you will be busy the second month.
I think running a business from home is difficult unless you discipline your self to go to work at a set time and stay at work.
 

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Small Potatoes
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I would say your advertising is not working. You should have advertising in your start up costs. Things like business cards ,door hangers and a web site are a good start. check out Roy Williams The Wizard of Adds it is a good read for setting up an advertising strategy .
A good friend of mine is mentioned in that book. :thumbsup:
 
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