I understand that you probably don’t have much extra money lying around, but since marketing is the most important step to growing your business, you HAVE to be willing to invest at least a little money into it (like at least $25/month).
The advertising process goes something like this:
The advertising process goes something like this:
- Test your marketing by setting a certain budget, running your ads, and seeing how many results you get.
- If you lose money? Pause your campaign, modify something, and test again.
- If you make money and are more profitable than before? Start spending a lot more on the same campaign and ramp it up so you can bring in lots of clients!
So how do you figure out your marketing budget? Simple. Figure out how much you can spend per client.
Here's a sample (again, pretending you're a web designer):
If you’re designing a website, let’s pretend you spend about $300 for programs, labor, and other incidental costs. But you charge your client $1,000 for the website.
This means you’re making $700 profit, or you have a 70% profit margin. The next question is, how much money do you want to earn per hour? Well let’s say a $1,000 project takes you 10 hours of work. After your expenses of $300, that means you’re getting paid about $70 per hour for your time to design the client’s website.
What is the lowest rate you’re willing to go and still be happy making enough money from your time? Let’s say you want to make at least $50 per hour minimum. That means that, after 10 hours of work at $50 each, you’re getting paid $500 personally for the design. Since you spent $300 on other costs, you still have $200 leftover, and that is what your advertising budget could technically be per client.
The takeaway? Technically, you can spend up to $199 in advertising to bring in just one client for a $1,000 job and still be profitable (your company would have $1 in profit and you would personally have made $500).
Obviously we want profit to be as high as possible so your company can grow, but you get the point.
Here's a sample (again, pretending you're a web designer):
If you’re designing a website, let’s pretend you spend about $300 for programs, labor, and other incidental costs. But you charge your client $1,000 for the website.
This means you’re making $700 profit, or you have a 70% profit margin. The next question is, how much money do you want to earn per hour? Well let’s say a $1,000 project takes you 10 hours of work. After your expenses of $300, that means you’re getting paid about $70 per hour for your time to design the client’s website.
What is the lowest rate you’re willing to go and still be happy making enough money from your time? Let’s say you want to make at least $50 per hour minimum. That means that, after 10 hours of work at $50 each, you’re getting paid $500 personally for the design. Since you spent $300 on other costs, you still have $200 leftover, and that is what your advertising budget could technically be per client.
The takeaway? Technically, you can spend up to $199 in advertising to bring in just one client for a $1,000 job and still be profitable (your company would have $1 in profit and you would personally have made $500).
Obviously we want profit to be as high as possible so your company can grow, but you get the point.
Decide how much you feel comfortable spending.
How many clients could you comfortably take on per month? If your answer is about 5 per month, then in that case, you can technically spend up to $1,000 per month if needed to bring in just 5 new clients, and your company would break even (and you'd personally earn $2,500 in income).
Now I know that might sound a bit high, and we are definitely not going to be spending that much to start, but that is the highest amount you could theoretically spend per month. If you’re bringing in at least 5 clients, you’re well ahead of the game and will have a very successful advertising campaign. Then, if you wanted to make even more money, you’d have to start hiring people so you can do more than 5 projects per month.
While you're in the testing phase, however, it's usually safest to pick a number somewhere between $25 and $200 per month to spend. Remember, the more you spend, the more accurate your results will be and faster the testing period will be.
Because your ad will be shown to many more people, you'll get data much more quickly. $25 might take about 2 weeks before you can get realistic results. $200 might only take 3-4 days. If you barely spend anything, your results will be inconsistent and you won't have reliable data on whether or not your advertising campaign is working.
There is no set number for how many tests it will take before finding a winning campaign, as it can be anywhere from 1 to 1,000 or more. Thomas Edison had 10,000 failed attempts before he successfully created a working lightbulb.
A good of thumb though is to plan on at least 15 failing campaigns before you find a winner. This means if you set your test budget at $25, you have to spend at least $375 before you start to turn a profit, and it will likely take about 6-7 months.
If you spend $200 per month, you're looking at about $3,000 before you turn a profit, but it will probably only take about 2 months of testing. You just have to really be on top of it and make sure you're monitoring results every day or two.
Now I know that might sound a bit high, and we are definitely not going to be spending that much to start, but that is the highest amount you could theoretically spend per month. If you’re bringing in at least 5 clients, you’re well ahead of the game and will have a very successful advertising campaign. Then, if you wanted to make even more money, you’d have to start hiring people so you can do more than 5 projects per month.
While you're in the testing phase, however, it's usually safest to pick a number somewhere between $25 and $200 per month to spend. Remember, the more you spend, the more accurate your results will be and faster the testing period will be.
Because your ad will be shown to many more people, you'll get data much more quickly. $25 might take about 2 weeks before you can get realistic results. $200 might only take 3-4 days. If you barely spend anything, your results will be inconsistent and you won't have reliable data on whether or not your advertising campaign is working.
There is no set number for how many tests it will take before finding a winning campaign, as it can be anywhere from 1 to 1,000 or more. Thomas Edison had 10,000 failed attempts before he successfully created a working lightbulb.
A good of thumb though is to plan on at least 15 failing campaigns before you find a winner. This means if you set your test budget at $25, you have to spend at least $375 before you start to turn a profit, and it will likely take about 6-7 months.
If you spend $200 per month, you're looking at about $3,000 before you turn a profit, but it will probably only take about 2 months of testing. You just have to really be on top of it and make sure you're monitoring results every day or two.
MARKETING ACTION STEP 7: Calculate how much you can spend at most.
Do the calculations above to find out how much you can spend per client, and then find out how much you can theoretically spend per month to bring in the number of clients you feel comfortable working with. Knowing these numbers will give you an idea of the boundaries for your marketing plan.
MARKETING ACTION STEP 8: Decide what you're committed to spending to test.
Find out what amount of money you’re comfortable spending per month to test your advertising plan and see whether it works or not. A good number is somewhere between $25 and $200 per month. Less than that will be too little to see realistic results, and more will be too expensive to risk wasting if your first few attempts are a failure.
It's important to remember that once you pick a number, you should not change it. Set that number as your budget and spend it all before you make a judgement call as to whether the test was a success or a failure.
It's important to remember that once you pick a number, you should not change it. Set that number as your budget and spend it all before you make a judgement call as to whether the test was a success or a failure.
About Me
Martin Bentsen
Martin Bentsen, founder of Bentsen Breakthrough Consulting, has spoken numerous times at New York University, has run educational seminars at Actor's Connection on branding and marketing strategies for performers, and has written a 60 page informational book called Get Cast™, focusing on marketing tactics actors can use to find more consistent work. He is a member of both the National Association of Sales Professionals and Sales & Marketing Executives International, two highly acclaimed marketing organizations in the United States.
Martin graduated in 2011 with honors from NYU's Tisch School of the Arts' Film and Television program with a focus on directing and in 2010, he founded City Headshots®, which, according to Yelp, is ranked the top headshot studio in the United States. City Headshots currently employs seven people and has locations in New York, Denver, and Philadelphia. Some of City Headshots’ repeat clients include well known companies such as LinkedIn Corp, Facebook, American Express, and many of its photos have been featured in The New York Times and The Wall Street Journal.
As a business owner who has grown a photography business from zero to half a million dollars per year, Martin not only understands the intricacies of marketing and finding clients, but also what it takes for clients to successfully navigate the marketing world and make themselves memorable. He coaches small business owners one-on-one with their branding, marketing, and operational strategies, and in how they conduct themselves with actual clients.
Martin’s long term goal is to run major business seminars across the country while expanding his City Headshots brand to go international.
Martin graduated in 2011 with honors from NYU's Tisch School of the Arts' Film and Television program with a focus on directing and in 2010, he founded City Headshots®, which, according to Yelp, is ranked the top headshot studio in the United States. City Headshots currently employs seven people and has locations in New York, Denver, and Philadelphia. Some of City Headshots’ repeat clients include well known companies such as LinkedIn Corp, Facebook, American Express, and many of its photos have been featured in The New York Times and The Wall Street Journal.
As a business owner who has grown a photography business from zero to half a million dollars per year, Martin not only understands the intricacies of marketing and finding clients, but also what it takes for clients to successfully navigate the marketing world and make themselves memorable. He coaches small business owners one-on-one with their branding, marketing, and operational strategies, and in how they conduct themselves with actual clients.
Martin’s long term goal is to run major business seminars across the country while expanding his City Headshots brand to go international.