I often get asked how much budget should I spend on my marketing, how much should I allow for? And this question will boil down to a few key figures.
So first, you absolutely need to know or at least have a rough idea of how much it costs you to get one customer. And I’ve gone through the most important marketing figures in another video that breaks that down.
The second thing is you need to know how much that customer is going to bring you in over the next 90 days. And those are the key figures that you need to know in relation to how your marketing is working.
But of course the ones that after that are going to be cashflow and that is going to be how long it takes from you spending your money to your initial leads out, to how long you start to get money in and when essentially has paid for your costs to get a customer.
And I would suggest that if you’ve got an accountant, you probably should, do you need to get some kind of cash flow in place so that you can figure that out.
So let’s say it costs £100 to get a new customer, but it takes me six months to get that £100 back is the lifetime value of that customer’s, say, £5,000.
You need to make sure you have the cash flow in place whilst also building up. And of course, the other thing you need to have in mind is how much your gross margin is and how much it costs to deliver that actual service to those customers so you can properly factor things through.
Now, again, I strongly suggest you use some kind of budgeting tool. You’ve got Xero, for example, or even a good old spreadsheet, which you can then tweak and put in a proper cash flow forecast to make sure that you are not going to run out of money doing your marketing and most importantly, not being able to supply the service to the customers that you have already won.
