I’m a big fan of effective budgeting.  I don’t mean the old “use last year’s numbers and stick it in a drawer until next year” type of budgeting, but real world,  data based, flexible budgeting, the kind your entire profit plan is built around, the kind that, when done right and used effectively, would at least double and often triple the profit levels of most small businesses.  However, I find that many times people get tripped up on their marketing costs.

On one hand, marketing is an expense that needs to be controlled, just like all of your other expenses.  On the other hand, marketing is an investment, and the more you spend, the more you make.  Should your marketing costs be firmly budgeted, or should they be maximized for the greatest amount of sales in the shortest period of time?

Most businesses, including all successful businesses, have a marketing plan, but all too often that plan is missing a key ingredient – the holes.  Marketers get too focused on the product or service they are selling and they forget about their customer, and more importantly, exactly what their customer is looking for.  They forget about the holes!

So what’s a hole?  Remember that nobody buys a drill because they want a drill.  They buy a drill because they want holes.  The “hole” is the solution to your customer’s problem.  The “hole” is what you should be addressing in your marketing, not the drill.  The hole is what your customer is really looking for.

I saw the new show Shark Tank the other night, and found it very interesting.  Inventors and entrepreneurs would approach the shark tank, a panel of five venture capitalists, and present their business plans, hoping to negotiate an offer from one of the sharks for the money they needed in exchange for a share of ownership in the company.

It was no surprise that over-valuations ran rampant, but what I was really glad to see was the care that the sharks took in determining the percent of ownership they would accept.  It was really quite simple.  If the shark thought the concept was profitable enough and the entrepreneur had a good grasp of the critical variables that need to be controlled for the business to succeed, then the shark would accept a 50% ownership share.  If the entrepreneur did not understand their critical variables, the sharks required at least 51% ownership before they would invest.  Obviously, they wanted the controlling interest to protect their investment from the entrepreneur they were partnering with.

The residential real estate market in the greater Tampa area is continuing to strengthen, a positive trend that began about four months ago.  In fact, some of the latest signs of this trend can be seen in the short sale arena.

In most any market, following the laws of supply and demand, a sale does not occur until we have both a willing seller and a willing buyer.  In short sales, however, a willing buyer and seller are not enough.  For a short sale to proceed, the seller’s bank must approve the deal after the buyer and seller have agreed to the terms.  Let me describe a recent sale to illustrate my point.

I’ve heard a lot of words used to describe this recession, and I don’t think grateful is one of them.  It’s certainly not the most common adjective most people think of when discussing a recession, but that’s exactly how I feel.  Grateful.  Before you think I’m some kind of nut-job that loves pain & misery, let me explain how I got here.

I was affected by this recession just like everyone else.  I experienced reduced sales, reduced income, evaporating profits, higher debt ratios and business losses.  In one case, the losses were enough that I chose to close one of my businesses.  These are not the sort of things I enjoy.

Being creative with your marketing can help attract a lot of attention to your ads, and when done well, can even create a buzz. There’s nothing better than when people like your ad so much, they tell all their friends to look for you ad.  They tell them where to find it in which magazine, TV show, or they post it in facebook and forward it in emails.  They spread the word for you, for free, to people that trust them.  It’s modern day word of mouth advertising, and there’s nothing more effective.

Just one word of warning – don’t get so caught up in the creative side of your advertising that you lose sight of your core message.  After all, if your ads don’t make an effective offer to the consumer, then you’re really paying for brand recognition, and most small businesses can’t afford an effective brand recognition advertising campaign.

When was the last time you created a raving fan in your business, someone who not only returns over and over as a repeat customer, but someone who tells everyone they know, and maybe a few people they don’t, how they need to try your product or service because it’s so wonderful?  Someone who is so excited about your business that their friends want to try it out, even if it’s just to see what all the fuss is about?  If this happens several times each day in your business, you probably won’t find this post very useful, but if not, let me tell you about about a mocha cappuccino I encountered today.

Continued from Part 1, posted July 12:

4) I Know Everything I Need by Looking at my Bank Account Balance

It’s amazing how much things can change in a few short years.  Unemployment went from about 4% to over 10%, seemingly overnight.  Businesses are failing in record numbers, only to be replaced by new businesses, in record numbers.  Where people used to graduate from school, get a job, and plan on starting their own business in 5 to 10 years, surveys now show those same people are starting their businesses immediately upon graduation.  Many more people have lost their jobs, only to find a tight job market, with few openings and long lines of qualified applicants.  A lot of these folks have also started their own businesses.

Running a business is tough enough without trying to attract customers with a marketing message that is outdated, irrelevant, or just plain wrong, yet I continue to see businesses struggling with exactly these kinds of messages. A great message that has outlived its relevance to consumers is no longer a great message. Let me show you an example of a company that has effectively used this principle to expand their market share during this recession.