Tuesday, August 19, 2008

The Chicken and the Egg

I was in a coffee shop recently and the owner was describing how slow things are and he knows he needs to advertise, but he needs customers to get the money to advertise, etc. It can be a vicious circle.

Over the years I have discovered that there are very few businesses that have enough capital and they end up like Mr. Coffee Shop Owner. One day, unless something happens beyond his control, it will be another empty storefront.

So, how do you figure this out? Do you set a budget based on what you have? Or do you decide what you are going to do and then figure out how to raise the funds to do it? Hence the chicken and the egg question? Which do you do first?

First some advice, whatever dollar amount you come up with, double it. This will cover mistakes, false starts, etc. It's better to be ahead of the curve than behind the eight ball.

Enough cliche's, check this out:

Set Your Objectives First and Then Your Budget

The reality is that business success requires careful planning. Many entrepreneurs with great ideas fail as owners because they don't take into consideration the importance of marketing, and they don't budget sufficient funds to meet their objectives. Since their goals are not met, the business ultimately fails.

What does this mean to the small business owner? "You need to be very specific about your objectives, and then you have to budget the funds to accomplish them," explains Michael Goodman.

It costs money to acquire and retain customers. The cost of getting a new customer or keeping one you already have can be a significant expense, especially to a new company.

"It's less expensive to acquire and keep a customer if you've positioned yourself well up front, and that costs money too," says Goodman.

How much should you budget for marketing? That's a great question. And we need more space than this to answer it. Visit 911 Marketing Help, and download a copy of the report 10 Great Ideas to Jump-Start Your Marketing, for more information.

In short: Before embarking on a new business venture, it's imperative that you carefully consider your business objectives and ensure you have sufficient capital to meet them.