How to Make the Most of your Marketing Money and Stay Afloat!
The last few episodes have been epiccccccc - loaded with information, exciting, personable. Some of them kind of long.
Well, today I’m going to attempt to make the subject of marketing exciting so you don’t fall asleep.
We’re taking a step back to talk about something that not many talk about or even recognize in the industry, but it will make or break your business.
This is actually one of my favorite parts of having a business because it’s thrilling (and sometimes disappointing) but either way, it can always help your business progress.
This is one of those episodes that will be loaded with useful information, maybe not the most exciting episode ever….
But it can really make sure your business is in the right place.
So let’s talk about ROI.
ROI means Return on Investment.
First you have your marketing plan which you are going to design to choose the best marketing strategies for yourself, but next you have to measure those methods as they’re taking action.
This may be for Google, IG, FB - whatever marketing you’re using that is being paid for.
You don’t want to keep the ones that don’t work. If they don’t work, you don’t make money right?
If you have paid marketing, which is necessary to really let your business take off quickly (unless you just intend on letting it slowly grow or stay really really small), then you need to know how much your company is making per month and what portion of that is related to your paid marketing. That’s where your ROI comes in.
Every month you should track how much your marketing is bringing into your company versus how much you’re paying for it.
That will determine your ROI. You don’t necessarily even have to use a percentage though, because if you’re making under what you’re spending then obviously it isn’t even worth it.
For example, let’s say your spending $200 a month on Google but it’s only making you $150 a month. That stream is not reliable or making profit, as it’s not even making over what you’re spending, so you should let that stream go. But let’s look into it a little bit further.
Now, if you see that stream in the future keep growing and keep progressing (maybe it only made $25 the month before), then you can keep that stream and let it grow.
If it only made $25 the month before and then it makes $150 the next month, it’s growing pretty quickly and should keep growing as the months go on.
If there is a history with that marketing stream that it’s constantly under what you’re spending, drop that marketing stream altogether - it’s making you negative.
Negative ROI streams can destroy your business, as you’re gathering too many expenses for the company with not enough income to make up for it.
Expenses are great (especially for taxes) but you don’t want them ever to be over your income, otherwise your business is negative and on the path to bankruptcy. (womp womp)
Now, if you just started your business and are in the 1-2 years, you are allowed to be negative as the IRS sees it as you investing in your startup.
However, in my growing of my companies I have never been negative, even in startup (but I also am not running a construction business, where there’s tons of investment needed).
One issue I see quite a bit with photographers is having too many expenses. We get wrapped up in what’s new and what’s great and we need it all.
A lot of businesses go negative the first few years (like I said it’s okay sometimes) but photography? I have no idea how. You don’t need much investment to take pictures. If you have a studio, that’s a bit different. If you’re just a wedding photographer, you just need 2 cameras, 2-4 flashes, a few lenses, and some memory cards. It should add up to maybe $10k at the most, and you should be making that in like 5 weddings or so if you’re just starting out (maybe 10 weddings if your pricing is low).
If you need more equipment, grow with your company. A lot of the time if you buy a lot before you start, you won’t end up using it all.
The base line - expenses help on taxes, but you never want to be over your tax line on expenses. If taxes are 30% your expenses should be too. You should always have profit quite a bit over expenses. It’s okay to pay a few taxes. If you do need help tracking this I recommend an accountant because they can really help you stay on track, and in the green.
But anyways, I can rant on taxes all day long. Let’s get back to our ROI -
(I know guys, this is the most exciting podcast episode everrrrrrr - but it’s SO important so stick with me)
Let’s say you have a stream that is bringing in income consistently - you spend $300 and it gives you $3000. Let’s call this stream A.
But let’s say that you have another stream that you spend $300 and it gives you $30,000 (yes this is possible). We’ll call this stream B.
At this point they’re both earning, but the 2nd is earning much more. This is where looking at the past records of the streams come in handy. Is stream A worth keeping? Is it consistently over what you’re spending? Or does it duck down and go negative sometimes?
B is clearly making WAY more of a return than source A, but if A is bringing in income too every month, I’d keep both.
Why not keep something that’s pulling in income?
I always prefer to eliminate all unstable sources and keep what I know will be growing for me. For example, I use the Knot, and right now, it’s not pulling as much as it usually does BUT I have older streams that are pulling a crazy ROI, so I’m going to let that stream grow, even if it’s barely clearing ROI right now. Why? I have a history that it works, but it needs time to grow.
Either way you should be tracking your sources of marketing vs the income they pull every month. If it’s not pulling any income, eliminate that expense.
You know your expenses, we got that down. But how do you find out what each marketing stream is making? Google? Fb? Ig?
How the heck do you know where the bookings are coming from?
The easiest way is your website contact form.
It can be something as simple as - where did you hear about us? With a short answer form for them to input what source they heard about you.
Then, I use a software called Streak, which is free with Gmail. It integrates with Gmail to help you track leads (and work with followups, baby Jesus it’s amazing). Did I mention FREE?
With this software, you can input where the leads are coming from, which then makes a chart for me to show me what is pulling.
The nerdy side of me screams with excitement when I find such useful software.
The Streak system also tracks dates so you can know when the lead came in. Furthermore, you can add your own columns. You can track what date they booked or even how much each sale was.
So when do I do all this?
After the 1st of every month.
I have a chart in Excel (or Google Spreadsheets) that I set up so I can write down how much I’m making per month. This is net, take home money. This does not include processing fees or sales tax.
I set a goal for myself and track to make sure I hit it.
I then calculate sales tax due, and then check my revenue streams, also tracked by this chart.
I make sure my marketing streams are staying consistent and eliminate any subscriptions or paid advertising that just isn’t working for us.
That way I have a record every month that shows what’s working, what may be not working, and then I can take action and make sure my business isn’t wasting money on marketing.
Marketing can be really expensive once you get your company going, so it’s important. For example, a few months ago, I was paying $500/month for a listing where I made maybe $50 over that listing per month. Once I saw that, I cut out that marketing and switched to something else that hopefully is working much better now (I have to track it today since the month just ended).
Business is all about making over what you’re spending. I know this episode wasn’t super fun or woohoo, but hopefully it did help get your mind in the right place to grow a crazy successful business and grow WITH your business.
In closing, Your marketing will always change. If something doesn’t work, it doesn’t work. Some media may fall off over time, so be prepared to always check those numbers and make sure that you’re in the green.
Until next time!