Before You Spend Money to Make Money…
Get Your Business in Order
Many businesses fall for the line, “you have to spend money to make money.” This line has been drilled into our heads for decades by people selling advertising. Often, the last dime spent by a struggling business goes to advertising in hopes that exposure will convert into sales success. I want to know that if your business is struggling now, advertising won’t fix the problem.
The purpose of advertising is to buy new customers. Some, though very few, businesses must always be buying new customers. A company that solves a problem that doesn’t recur is an example. Some law firms fit this description. Once your case is settled, you won’t need a lawyer again for a long time. Few people talk about the lawyer who helped with their criminal case. Advertising might be the life blood of such a business.
But if your business isn’t up to the breakeven line, advertising is probably a waste of money. If your business is well-executed in terms of delivering a great product at a reasonable price while providing excellent service, you should be experiencing steady growth from word-of-mouth. If that isn’t happening, advertising will pull in some new customers who try your business at a discount and probably will not return. You’ll spend a lot of money to buy a single sale customer.
A business grows by the fundamentals. Get them right, the business will succeed. When a successful business buys new customers, those customers come back. The is an after-life to your sale.
People who sell advertising will tell you that you must spend money to make money. They will also recommend that you cut deep when you advertise. Certainly, half price will bring in more people than 10% off. Free will blow the doors off. Sure. It costs a lot of money too. And then? Things slide back to normal.
I have had this argument many clients. Spend huge amounts on advertising before you get your business fully organized and you are wasting money. Grow organically first.
I’ve lost that argument a few times and none of those businesses are still open.
Chris Reich, TeachU
Make sure your business is growing organically before you spend on advertising. Many businesses spwndtheir last dime trying to advertise out of a hole.