If you are a small business owner or self-employed professional, the most important thing for you to understanding about setting a marketing budget is that all money spent on marketing should be “risk capital”.
By “risk capital”, I mean money you can afford to lose without it keeping you up at night…money you do not need to pay the mortgage…money that, if you lose it all, it won’t hurt you financially or have a big negative impact on your life.
Marketing is like the stock market and gambling in this way: you can make money, but you can also lose money.
In all three endeavors, there is no guarantee you will make money.
In fact it is quite possible in all three areas (though least likely in marketing) to lose all of your money—every penny—and people do from time to time.
A case in point is SH, an energy consultant. I recommended that he do a small e-mail marketing campaign to generate leads with a free report offer.
He found a “cheap” e-list from a source I considered questionable (cheap lists virtually never work) and, despite my advice, rented the cheap list. As I expected, it generated zero results.
Then SH was hesitant to try again with a list I considered legitimate, because the reputable list broker I sent him to quoted him $1,500.
Though a fair price, the 15 hundred bucks for sending 5,000 e-mails was more than SH was willing to risk.
Did I have any alternatives? My answer to SH was as follows: “I do have a number of ideas, but here is the problem: they all cost money.
“List brokers, copywriters, ad agencies, and others want to generate leads for you and can.
“But, they cannot work for free. You have to have some cash to play, just like at the casino or the Dow. The odds are better in marketing. But they are not 100%.”
Action step: if you are a business start-up or cash-strapped solopreneur, determine and write down the maximum dollar amount of money you are willing and comfortable to risk on marketing.
Then go from there. Perry Marshall, the pay-per-click guru, advises small marketers that they can test Google AdWords for as little as $100 a day.
And it costs nothing to write an article on your area of expertise for a blog or your local newspaper or a trade journal, if you do the work yourself.
My parting observation: Do you need both time and money to be successful in marketing? No. But you do need at least one of them.
If you have no money, you use “sweat equity” and do all the work yourself. If you have no time but you are flush, spend some of that money and hire others to do the marketing for you.
And if you have neither time nor money? Then you can’t do marketing for your product or service until you find one or the other. Sorry.
Bob Bly is the author of “World’s Best Copywriting Secrets” and has written copy for more than 100 companies including IBM, Boardroom, Medical Economics and AT&T. He is the author of more than 75 books and a columnist for Target Marketing, Early To Rise and The Writer. McGraw-Hill calls him “America’s top copywriter”.