Running your own show is perhaps the fastest way to find out what you’re NOT good at, right?
Let’s be honest: we all go into entrepreneurship waiting for this universal download, miraculously waking up one day knowing everything we need to run a successful business. Much like parenting - which ends up being a lot of Googling, ringing around and ‘winging it’ - wrangling our businesses often becomes a spicy mix of research, advice and instinct.
One particularly spicy part of business we are constantly trying to get ‘right’ is marketing.
This isn’t helped by the fact that successful marketing really lives on a spectrum governed by:
Add the fact that advertising sales reps all swear blind that their way is THE way and we’re left with more overwhelm than we care to deal with.
Side note: for the purposes of this article, I’ll be using the terms ‘marketing’ and ‘advertising’ interchangeably. Industry insiders may argue their differences, but in this conversation I’ll use them to refer to the different ways we promote our goods and services in order to generate sales. Things like Google & Facebook Ads, print material, signage, affiliates & partnerships, etc.
I’ve seen limiting beliefs and expertitis plague business owners in the realms of marketing the same way it does with accounting and financial advice.
Has this ever come up in a pitch?
That last one is normally where business clients just like mine come unstuck, and it’s where I’d like to provide additional insight in this little love letter from Liz.
I hate to be the bearer of bad news, but this number is often benchmarked against all the wrong data in your business. It can be the biggest piece of misleading information that can have you subscribing to a product or service that doesn’t actually work for you, once you take ALL the relevant factors into account.
If you find yourself reviewing your accounts and having that ‘something ain’t adding up here’ feeling, there’s a very good chance the answer could be obscured by some poorly justified marketing spend.
You may have brought these concerns to your accountant in the past, only to have them take a casual glance at your books and tell you it all seems in order. I have to take your accountant’s side for a moment here; there are 3 very good reasons why they may not have brought this up with you:
If your data isn’t structured to accurately calculate your cost of production and delivery on a micro level, problems won’t ever reveal themselves clearly on a macro scale.
Don’t have all your expenses categorised accurately, up-to-date and reflected in your unit price in a readily available manner? Then your accountant is highly unlikely to spot anything worth investigating in the limited time they have to work with you.
And you’re even less likely to run those numbers in a very compelling sales chat.
Another factor commonly missed in these calculations is where your production or delivery costs increase with a subsequent increase in goods sold. There are a number of metrics that could be up for review if your advertising spend met the sales target they’re promising:
A caveat here: it’s easy to fall into analysis paralysis when gauging whether to invest in an advertising opportunity. If you look hard enough, there will always be a good reason to say ‘no’. But having a rough guide for the costs of expansion can save you from unwelcome surprises should you say ‘yes’.
Your final sale price is often the number a sales rep will use to justify the investment, usually gleaned from what they can see either in store or on your website. This is what they CAN quantify in their conversation with you.
Your GROSS profit figure - what you get to ‘keep’ after production, manufacturing, shipping, etc. calculated at a per unit basis - is what you should ACTUALLY be benchmarking your investment against. However, this figure is one that sales reps typically aren’t privy to. (And let’s face it, this number would be far more realistic and much less sexy, so you can see why it doesn’t come up unless you bring it up).
As I mentioned at the top of this article, the issues relating to measuring marketing spend are much the same as those that frustrate us about our financial data at large. Thankfully, the solutions are also similar:
You need to start by realising that your data management is about YOU. Whether you’re using Xero, MYOB, Quickbooks or an old fashioned spreadsheet, you need to understand that the tracking of all this information is for YOUR benefit, first and foremost. Therefore, it must be structured in a way that makes sense to you:
Take back control of your accounting software! Make time to sit with your bookkeeper and set the record straight for YOU. You’re paying for the subscription, so make sure you eat first when it comes to who that data serves.
Throughout the process of reclaiming and reorganising your financial data, be mindful at every stage that this is YOUR software, designed to structure YOUR information so you can make profitable decisions for YOUR business.
Yes, collaboration with your accountant and bookkeeper is important. Yes, easy reporting to the ATO is a plus. But the highest priority here is that your financial information is simple and clear, allowing you to exercise discernment when you’re negotiating with people like advertising sales reps.
Which brings us to another essential component of empowerment: collaboration.
As with the accounting industry, expertitis is rife. Many niche professionals see their knowledge as superior to the instincts of the business owner. But if you can back that intuition up with facts and figures within easy reach, you can take back control of these conversations and hold other professionals you work alongside to account.
This is the ultimate destination I have in mind for my business clients: clarity and confidence made possible by elegantly simple financial data and the empowerment such organisation brings.
The difference between the overwhelmed you and this higher, more prosperous version isn’t obvious ‘on paper’ per se. For sure, your data will become crystal clear to you, making both ‘leaks’ and opportunities easier to spot.
But the real change is inside of you.
This is about putting an end to financial anxiety. No more running around filing receipts and running reports that are meaningless to you - whilst paying for the people and programs to do so in the process! Taking ownership of your financial data to give yourself the gift of insight is the first important step towards reclaiming your power as a business owner.
This marketing aspect of your business finances is a great vehicle for grasping this broader idea of financial power. If you’re hesitant about peeking into your Xero reports, or just have no idea where to start with a virtual laundry-pile of information, this is a great spot to get cracking.
But you don’t have to take this journey alone! In fact, this is a big part of what I do as a financial mentor. I guide frustrated business owners through their finances one hill at a time, along the way creating space for answering questions and cultivating curiosity (we don’t work in 6 minute increments either, which helps A LOT). If ‘financial anxiety’ is ringing true for you and you’re eager to know more about how I can help, it’s as simple as booking a free chat with me (here’s my calendar so you can grab a time slot that works for you: https://lizjarvis.youcanbook.me/)
|Disclaimer: These are yuck and boring but unfortunately a legal requirement for professionals in my industry. So just a reminder, the information contained here is general in nature and you should seek financial and business advice tailored to your own personal circumstances. Which, by no small coincidence, I can help you out with. Head over to my website and book a free 30 minute chat with me: https://betterbusinessdecisions.com.au/