You and I both deplore the high cost of advertising. It costs too much to use the newspaper. It costs too much to buy radio time. Television is completely out of the ballpark. Today, advertising costs are higher and results are lower. Traditional media is the worst value in history. The typical advertising cost of one appointment is more than $150. With the lower quality of an advertised lead, your closing ratio may be 50 percent or less. The result: Your cost is more than $300 to acquire a new customer. And, that is the good news.
The bad news is you might spend $1,000 and not get a single appointment!
Yes, the cost of advertising is exorbitant. In fact, for many business owners, it is unacceptable. Consider, of the 20,000 or so window coverings specialists in the United States, about two-thirds are unwilling to risk purchasing a business telephone line and a yellow pages listing. Yet, in spite of the terrible cost, there is no other choice if you want to grow beyond a meager micro-business.
How can you possibly come out profit-wise when advertising costs so much—especially if you are a new person in business, a workroom, designer, or part-time blinds and shutters business trying for a toehold in a new business? With money tight, you are tempted not to advertise. Yet, why go into business if you don’t want to grow and make money? Yes, it is a risk to advertise; but, fortunately, it is a good bet when you follow the tried and true. In fact, when you look at your net profits over three years, it is much more costly not to advertise. Your opportunity loss can be more than $80,000 in a small business.
WHY DON’T WE ADVERTISE? FEAR WINS AGAIN!
The truth is, only fear keeps us from advertising. When the facts are known, the real cost of not advertising is sickening. You deny yourself the income you deserve, deny your family the good things in life. You struggle to put kids through college. You drive the old clunker a year longer than you want to and you settle for the home you can afford instead of the one you would really love to have.
Fear wins when desire is weak. If you really don’t care about growing your business and your income, then who cares? But, you would not be reading this article if you didn’t want to improve your income. As a business owner you must take measured risks to grow. Advertising is the place to begin. Here’s how.
HOW TO ADVERTISE AND WHERE
Once you decide to risk advertising there are time-tested and proven methods:
• Media Advertising: Yellow pages. Invest $30 to $75 a month for an in-column trademark ad, not a small display ad that will put you to the back of the section.
Newspaper by budget—about $300 to $500 per month with a frequency of weekly at least three weeks a month. Better to take a small ad, even one column by one inch, than to go over your budget.
• Activities: Canvassing. (I prefer the term friend finding.) Simply knock on doors of homes that need window coverings. This is the lowest cost and most effective form of advertising there is.
Flyers in target neighborhoods.
Postal mail to past customers.
E-mail to every prospect and customer you can find.
To grow, you must advertise. The truth is, no matter how unaffordable it seems, if you want to grow . . . if you want to have the income you deserve . . . if you want to enjoy a better standard of living for your family, then advertising is the only way to go!
NEW, HOME-BASED WORKROOM OR DESIGNER SALES WITH NO ADVERTISING AND PROMOTION
TOTAL THREE-YEAR NET PROFIT: $12,192YEAR 1 2 3 JOBS/MONTH 1 1.5 2 JOBS/YEAR 12 18 24 AVG. SALE $1,800 $2,000 $2,200 ANNUAL SALES $21,600 $36,000 $52,800 GROSS MARGIN (%) 40 42 44 GROSS PROFIT ($) 8,640 15,120 23,232 OPERATING EXPENSES/MONTH $700 $1,000 $1,200 ADVERTISING EXPENSES/MONTH 0 0 0 TOTAL EXPENSES/MONTH $700 $1,000 $1,200 TOTAL EXPENSES/YEAR $8,400 $12,000 $14,400 NET PROFIT $240 $3,120 $8,832 % OF SALES 1.1% 8.7% 16.7%
NEW, HOME-BASED WORKROOM OR DESIGNER SALES WITH ADVERTISING AND PROMOTION
TOTAL THREE-YEAR NET PROFIT: $94,848YEAR 1 2 3 JOBS/MONTH 3 5 8 JOBS/YEAR 36 60 96 AVG. SALE $1,800 $2,000 $2,200 ANNUAL SALES $64,800 $120,000 $211,200 GROSS MARGIN (%) 40 42 44 GROSS PROFIT ($) 25,920 50,400 92,928 OPERATING EXPENSES/MONTH $900 $1,200 $1,600 ADVERTISING EXPENSES/MONTH $700 $800 $1,000 TOTAL EXPENSES/MONTH $1,600 $2,000 $2,600 TOTAL EXPENSES/YEAR $19,200 $24,000 $31,200 NET PROFIT $6,720 $26,400 $61,728 % OF SALES 10.4% 22% 29.2%
This article is based on Steven C. Bursten’s actual experience with sales and financial information working with hundreds of window coverings businesses. Whether you are a sole manager who aspires to higher sales, or you manage 50 window fashion decorators in a multi-million dollar business, this series will help you manage sales better and increase your profitability. Bursten is co-founder of Window Coverings University and Exciting Windows! service. He also is the founder of Decorating Den Interiors and author of a how-to book on new business start up, “Bootstrap Entrepreneur.” Questions and comments are welcome: email@example.com or call (888) 333-8981.