Money and Marketing Fog and The Perfect Storm

Are you creating the perfect storm in your business? If you’re going about your day-to-day life and work in a money and marketing fog, you’re creating the perfect conditions to sink your finances and all of your hard work. If you’ve heard of the true story of the Andrea Gail and the movie The Perfect Storm, you know that the conditions were brewing for catastrophe and that the doomed swordfishing boat ended up right in its path.

In business there are two areas you need to keep a watchful eye on at all times: your money, and your marketing. I first heard the term “money fog”  from Mikelann Valterra, founder of the Women’s Earning Institute and a certified money expert (Mikelann is one of the featured experts in an upcoming Corporate Fugitive product).

She calls it “suffering from vagueness” and I think this is both succinct and brilliant. In the context of running a business, it simply means not knowing where you are or where you’re going with the money side of your business. If you’re also in a marketing fog, you’re in for big trouble!

There are many ways you can be in this haze, but one of the worst is when you have no clear financial goal and no plan to attain it.

When I speak with business owners about helping them design their business, the early discussion includes asking how much do you want to make, and how do you plan to get there? The reality is that for most, it’s pretty loose.

Their difficulty setting clear financial targets can be caused by a variety of reasons – lack of knowledge about the market, inexperience (completely reasonable, if you’re new to it!), difficulty coming up with pricing and packaging that will sell, and a whole host of mental roadblocks that often pop up.

When you’re operating without knowing your goals, your expenses, and what you need to profit, you’re in a money fog in your business. You’re likely underearning because you aren’t charging enough, or your rates are decent but because you’re spending too much and aren’t on top of this, your profit eludes you. If you only rarely look at your expenses against your targets, you’ll fail to see the warning signs that could alert you to get out of the storm’s path.

As well, if you have a wishy-washy dollar goal, and no real idea of what you need to sell in order to attain it and make a profit, this money fog seeps over to the marketing side of your business. You’ll have no clear way to price, target market and sell your services.

Marketing and your future cash flow are directly related. Marketing doesn’t bring you in money today, so if your marketing plan consists of “sales are down, what kind of promotion can I do in the next two weeks” then it’s not very likely to work. It has to be an ongoing function of your business – and it has to be based on your business objectives and tracked in relation to your sales.

Here are some of the money numbers you need to watch that relate to your marketing:

• Know what it costs you to run your business
• Know how much you need to make after all of your costs are covered to deliver a specific product or service and make a profit
• Know how many leads it generally takes you to get one sale, and how long it takes on average for a potential lead to become a customer
• Know how much it costs you to acquire a client:

State your average marketing cost per month

State your average amount of new customers per month

Divide the first number by figure two to determine your Average Customer Acquisition Cost.

• Know how much your customer is worth to you over a lifetime:

State your estimated average sale

State the estimated number of times a customer reorders

Multiply figure one by figure to the determine your Average Customer Lifetime Value.

(there is a spreadsheet you can use to determine this)

I’m more a words than numbers person and spreadsheets make me crazy, but these numbers are important. Once you know how many leads you need, and how much a customer is worth to you, you can:

• Keep track of how many contacts you’re making with prospects and know how many you need to fill a given program or meet a certain target. If you only convert 3 out of 10 people, and your goal is to obtain 9 new clients, you’d need to have 30 prospects on average, for example.
• Plan and adjust your marketing and promotions based on real numbers and not just a creative strategy. If your sales are down and you realize that you’ve had 50 per cent less meetings with prospective customers than you did in previous months, you can see that you need to focus more on getting leads.
• Have a number by which to assess your marketing and customer acquisition costs. If you know a customer is worth $3,000 to you over the lifetime of their relationship with you, it gives you a benchmark to measure your investments.

Of course, it goes without saying that your marketing efforts need to be focused directly on the ideal clients you want to attract. The clearer you are on who they are and where to find them, the more targeted and more successful the outcome will be. These numbers can guide you on how to set your prices and packages in a way to attain profit and your income goals, as well as how to know if your marketing is resulting in its core purpose – to lead to a sale.

Want to use this article? You can as long as you include this footer: Sherri Garrity is the Chief Corporate Fugitive and creator of the Five Keys Success SystemTM for ex-corporate employees and aspiring entrepreneurs who want to break free from the confines of their corporate experience and live outside of the ordinary. The Corporate Fugitive system demystifies the business of setting up, managing, marketing and growing a successful and extraordinary business. Visit www.corporatefugitive.com for information and step-by-step resources to take you from overwhelmed employee to extraordinary entrepreneur.