Does Your Small Business Need to Advertise on the Internet?

Internet companies are doing all they can to convince you that you are missing opportunities to grow your business if you are not using them to promote you. They have teams of marketers who are working hard to create a “message” that will convince you of a benefit that may not there for your business. They use examples of business owners who succeed using their services, but what they don’t tell you is how many business owners have used their services without success. Not that they are lying or don’t provide the service they market, but whether it will be a success for your small business — well, that is unknown. Before you decide to pay for any services that are offered, you must consider the risk.

YOU WANT MORE PROFITS, NOT MORE CUSTOMERS

Do you want views on your web site, clicks on an advertisement, or more customers?

No! … You want more PROFITS!

Many small businesses could be more profitable with less work if they would just pay attention to their advertising budget and disbursement of the same.

Customers are work!

Profits are the reward for the work! Just because you get more customers from your advertising doesn’t mean you are getting more profits.

Most Americans work hard and play hard, so getting the most from the time spent working is VERY IMPORTANT! More customers from your advertising may not be profitable and you may be working harder for nothing.

Just because you sold more goods or services in a year does not mean you are more profitable.

Recently, I went to a local home and garden show, while there I spoke with a small business owner who told me he was paying an online company over $1,400.00 per month for referral services. I asked him if he was happy with the service and he said, “no, I am not really getting satisfactory results.” I have spoken with many small business owners who have told me the same.

ANALYZE YOUR RETURN

Many small businesses do not analyze their advertisement expenses vs their profitability. Consider the above example:

$1,400.00 per month = $16,800.00 per year in online referral costs

The business owner I spoke with was in the construction industry so more than likely he is averaging about 25% gross profit on the jobs he bids. For some it is more and for some it is less, but this is a good average.

Unfortunately, many small or micro business owners (5 employees or less) do not consider their return accurately. Many micro businesses think that if they buy $1,400.00 of advertising and sell $1,400.00 of products or services, they have recovered the money they spent on advertising. That is not so.

That’s because advertising, alone, is not the total cost of doing business. Consider the following:

The small business owner needs to factor the cost to cover product, labor, office staff, warehousing, and commissions if they apply, and more. It is likely they need to sell around $80.000.00 to $100.000.00 to recover their all their advertising expense and make maybe make a profit.

Using the business, I mentioned above, $1,400.00 per month spent in advertising = at least $6,700.00 monthly sales needed to recover their advertising cost. If the business does not generate more than $6,700.00 from the advertising dollars spent that month, the result is they are not more profitable but they are working more! This is a very simple example.

KNOW YOUR BUSINESS AND YOUR CUSTOMERS

I spoke with a local furniture store owner who told me he spends very little money on advertising. He told me that the best advertising for him was “his customers.” He has been in business for over 30 years and many furniture stores have come and gone, but his store remains and is profitable.

This business owner knows his customers and how to reach them effectively. He knows how to get maximum profits for his efforts.

LOOK FOR FREE ADVERTISING

If ninety percent (90%) of your current or potential new customers are located within a twenty-five (25) miles of your business, all your advertising needs to be reaching them.

There are many ways to have a presence on the Internet and still reach local customers without spending any money. But first, you must look for the companies that can reach your local customers.

Every small business can have free pages or listings on the Internet. Take advantage of social sites, directories, news agencies, and local web sites — anything that offers free ways to display your business offerings.

If it makes your business visible to your community and it is free, GET ON IT!

 

 

 

 

Martin J Loeblein Jr

Author: Martin J Loeblein Jr

C.E.O Locoolly

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