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The Real Cost of Marketing Your Business (That Marketing Experts Don’t Want You to Know)

The Real Cost in Time & Money of Marketing Your BusinessAs small business owners, we’re bombarded with marketing advice all the time:

If you want tons of traffic you should guest post! If you want more clients you should master the art of the follow up! If you want more new business you should post infographics on Facebook and offer free advice in LinkedIn Groups!

And most marketers are really excited to tell you about how all of these tactics are ABSOLUTELY FREE.

Sorry, but nothing’s really free. If there’s one big lesson for you to learn about marketing (and business in general), it’s that if you want to save money, you have to spend time. And if you want things to take less time, you have to spend some money.

Most marketing experts will leave that part for you to figure out on your own.

But let’s face it: most of us with service-based or online businesses are bootstrappers. We don’t like to spend a lot of money on marketing. We prefer to attract new leads by commenting or posting on other people’s sites, attending networking events, or participating in Facebook or LinkedIn groups. All of these methods can be extremely effective. But have you ever thought about how much time they take?

While it’s easy to understand the monetary cost of advertising, other forms of marketing are harder to quantify. And when you’re just starting out in business, it’s even harder to figure out just what it will cost to market your business and what the returns (increased revenue) might be.

So instead of experimenting with different forms of advertising – based on serious research on your target customer, of course – you don’t spend any money at all, and continue to do your other “free” marketing in the hopes that it will work.

This can amount to a whole lot of wasted time for you, the “solo-preneur” who doesn’t have the ready cash to accelerate marketing efforts but thinks she has unlimited hours every single day to spend at a computer commenting, sharing, liking, and posting in the vain hope it will result in new clients.

There’s Got to Be Another Way!

Yes, there is! Here’s another way to create a marketing budget for your start-up business. It involves placing a cash value on your time (shudder).

Yes! Your time is worth something!

First you have to decide what it’s worth. An easy way to do this is to decide what you’d like to pay yourself, per hour, to be a business owner. For simplicity’s sake let’s say your salary is $50 per hour (it doesn’t matter if that’s what you charge for your coaching sessions or whatever. We’re talking about what you’re taking home at the end of the day, before taxes).

Second, choose how much time you want to spend on marketing. Forget about what you “should” spend – there are no “shoulds”, because every business is different. Say you budget two hours a day for marketing activities. That’s $100 per day, or $500 per week, all year long (because you haven’t set up your business to let you take a vacation, am I right?). Assuming you take weekends off (yeah right!), your effective cost of marketing – taking only YOUR time into account – is about $26,000 per year.

Let me guess – when you did the financial planning for your business, you only budgeted $200 a month for marketing, didn’t you?

See why this calculation doesn’t work? I bet some of you aren’t yet earning $26,000 per year in revenue, especially if you’re just starting out. But when you consider how much time you spend trying to “get your name out there”, you might be spending more than you’re getting back in new clients.

So What Can You Do?

First of all, figure out what works. Do you have a CRM (Customer Relationship Management) system? Good. Go in there and find out where you got all your clients from. Were they referrals, did they find you on Google, did they click on a Facebook ad, or did they find you at a networking event? You will be able to see which of your marketing efforts are most effective, and narrow down your activities to the top two or three that work the best.

Using our $50 per hour example from above, if you find that it takes four hours of social media marketing to acquire one coaching client who buys two 60-minute sessions at $100 per hour, then you effectively “spent” $200 to acquire a $200 client. Returns: net zero. It’s easy to see that the time wasn’t worth it.

On the other hand, if you can acquire that same client after a 15-minute interview (one that didn’t require much prep because you really know your stuff!), then your client acquisition cost was only $12.50. Returns: net $187.50. Totally worth it.

So let’s say that your last ten clients resulted from the following marketing activities:

  • A recent radio interview: 3 clients
  • A webinar: 2 clients
  • In-Person Networking: 2 clients
  • Twitter: 1 client
  • Facebook: 1 client
  • A guest blog: 1 client

You might think this breakdown doesn’t tell you much. But when you dig further, you notice that seven clients came to you after hearing you speak, in one format or another. This is a strong indication that your marketing time could be better spent doing public speaking than posting updates on social media. (Not that you should stop doing posting all together, but it doesn’t have to be the main focus of your marketing if most of your clients come from somewhere else).

How to Begin Tracking Your Time Cost of Marketing

If you’re just starting out in business and you don’t yet know where your clients are coming from, begin keeping track of your sources of work immediately. Use a CRM (if you can) or even just a spreadsheet to get started. When you get inquiries, ask how they found out about you, and record that information. Trends will start to emerge quickly, and you will easily see where to direct your marketing hours.

Next, start keeping a list of your marketing activities, and how long you spend on each one. Maybe you spend two hours a week on Twitter, an hour on Pinterest, three hours at networking events, and an hour designing Facebook ads. Multiply all of that time by your take-home hourly rate (remember, that’s not the same as the rate you charge your clients).

Compare those time costs to your most effective sources of business. If you find that your Twitter time never brings you any business, but your Pinterest time does, it’s a strong indication that you should spend more time on Pinterest and less time on Twitter.

Finally, never forget that free marketing is never really free. If you’re not spending money, you’re spending time instead.

And somewhere, the cost of your time needs to be factored in to your business financial planning. If you’re tracking these “costs” in a spreadsheet, I suggest you can incorporate it into your own salary or dividend line, as that will make this intangible “spending” a lot more real for you.

Once you know what type of marketing works (and yeah, I understand this is going to take some time, so start tracking it right from the beginning, promise?), then you can spend your time more wisely, doing “free” marketing activities that actually bring money into your business. Soon, your $500 per week time cost of marketing will start to pay off and you can continue to hone your marketing activities until you only do what you know to be most effective.

About Jessica Oman

Jessica's outside-the-box approach to business plan writing has helped her clients collectively raise almost $50 million in financing to start and grow new businesses. Sign up for her 5-part business plan training series for FREE here so you can get your business plan done and get your money sooner.

40 thoughts on “The Real Cost of Marketing Your Business (That Marketing Experts Don’t Want You to Know)

  1. wal! great post! this is so true. i get very frustrated with people who believe they don’t need to spend money on advertising! This post sums it up perfectly! I will make sure to educate my clients on this 🙂

    • Well, you don’t necessarily have to spend cash money on advertising, but time is money, and you’re going to spend one or the other or both. Glad you liked the post!

    • Jessica,
      Your point is well taken. We pay with our time or our money and until we value these resources and are accountable, we will not be able to see the true cost to our business.
      Thank you for this insightful article.
      Dina Burke

  2. “If you want to save money, you have to spend time. And if you want things to take less time, you have to spend some money.” That does about sum it up.

    But as far as a new person starting out trying to make money online, they probably aren’t going to be starting out giving an interview or doing a webinar. I guess it just depends on what area they are getting into and what expertise they have. Maybe a new person would feel comfortable doing a webinar, but not me.

    I don’t have any great expertise in any area, but I’m still trying to make money online and learning as I go. I really try NOT to think about how much time I’m spending trying to get traffic because in the end, I’ll be happy to make ANY money. I’m just hoping that in the end I WILL make some money and figure out what I’m good at and how I can help others make some money as well.

    We all know the money is out there. It’s just figuring out how to access it and how to provide great value to someone else in the process.

    So, although this is a great post, Jessica, and I know it will help others put a monetary value to their time, I have to say for now I’ll continue not thinking about how much my time is worth until I can at least start getting some traffic. But thanks for the ideas and I do like the idea of using a CRM or spreadsheet to keep track of where possible clients are coming from.

    • Hi Karleen, I’m sure you are an expert at something! But until you establish yourself as one, you’re right, you won’t make any money.

      Why not start tracking your marketing time right now, so you have something to benchmark against later? Why couldn’t you start out by doing an interview or giving a webinar? Perhaps you can interview someone else; start a podcast, start a blog. I totally support your trial and error method – I learned a ton doing the same thing 4 years ago – but it resulted in a ton of untracked and potentially wasted time that I’ll never get back.

      Think of your research and experimentation as a monetary investment. You can track it exactly the same way that I’ve described above, and then easily measure your ROI once you start bringing in revenue.

      Hope that helps!

      • Well, yes, I’m kind of an expert at working with dogs, but it doesn’t really fit into my internet marketing niche! I’ll figure something out, though.

        You’re right, Jessica, I will try tracking my marketing time. I do have a blog and yes, I could interview someone else. I’ll work on that.

        Thanks for the info and encouragement!

  3. Great post. It’s easy to be seduced by allegedly free marketing.

    I really like the TimeDoctor application for tracking just how much time I waste on low priority things. It’s extremely shocking.

    –Luke

  4. Well, when you put it like that . . . . : )

    Thinking about how much time I spend on each of my marketing activities multiplied by my hourly rate puts things in a whole different light. Yowsa.

    One thing that helped me when I was first starting out was a piece of advice I read about how to decide which marketing activities to do each day when there are so many available marketing activities a person *could* possibly do. (I still get overwhelmed by all the choices from time to time.) The advice was to focus on the lowest hanging fruit when first starting out, like getting clients in the door who will pay you now, then focusing on longer-term things like list-building and developing products and programs once you have a solid monthly income coming in. Not that you shouldn’t start building your list right away, but just that the #1 most important thing when you’re starting out is to get cash-paying clients now.

    The other wonderful piece of advice that helped me was something Naomi Dunford said about doing the activities that are “closest to cash” when you don’t know what to do. If something will pay off this week or this month, do that thing first, then only after that’s done, focus on the longer-term marketing activities.

    I love your advice here to track your marketing from the get-go to determine what works best and focus on that. For me, that would be direct outreach to potential clients and referrals, so that’s what I decided to put front and center for 1Q, while back-burnering some of my other marketing activities, at least for now.

    Thanks for this really fantastic post, it helped me see how I could be much more efficient at self-marketing. : )

    • I love Naomi 🙂

      I think the cash first approach is a great one – but it’s just as important to have a longer term objective that you’re always thinking about as you go for the low hanging fruit. Otherwise you might get too caught up in what you’re doing to get clients now, and then begins the feast or famine cycle of marketing.

      Thanks for your kind comments!

      • Agreed! It for sure needs to be a healthy mix. My problem was I was focused way too much on the long-term activities and not near enough on the “get clients now” activities for a good part of last year. Which creates its own set of problems. I chalk that up to complacency as a result of having a couple of fantastic on-going clients, but if they both fired me tomorrow, I’d be in a world of hurt. ; )

  5. Great post. Many people don’t realize how much time and where they spend it on their marketing efforts which ultimately costs them money. I am a spreadsheet fanatic and I like your breakdown idea so I know where exactly to focus my marketing efforts. Thanks!

  6. And just so you feel a little better about the “horrible truth” here’s an old quote from Peter Drucker, probably one of the best minds ever directed at business:

    “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

    Also, be sure you’re qualifying them after you land them initially – this is the single biggest fail in selling things because you’ll spend a lot of time presenting to them with no result unless you’re very sure they’re qualified –

    • Love Drucker – a brilliant mind.

      I totally agree – you must qualify your clients! But if your marketing is focused, you’re hopefully attracting more of the right kinds of clients, making your qualification process easier.

  7. 1st of all – – great use of LeadBoxes in your author box. LOVE that (and that’s why Guest Blogging isn’t dead, people).

    2nd of all – – it took me a LONG time to figure out how much my time was worth and that spending on marketing + traffic was pouring gasoline on the fire.

    You spend a lot of time to create connections & create your content, why on Earth would you let it be published and then die?

    Great article, Jessica.

    – Steve

  8. Thanks for the article – I love the simplicity of your explanation, it’s very practical and real.
    The main idea of the article wasn’t ‘a major discovery’ for me, but the application on marketing, and the wording made the point less vague and more practical compared to other sources I’ve found. It seems to me as I finally got it 😀

    • That’s great – sometimes I find the same thing. I have to read similar content over and over again and one day someone finally says it in a way that sticks. Happy to help!

  9. Hi Jessica

    I think most marketers aren’t real about their business, and saying an Internet business owner gets clients from multiple sources like , Facebook, Twitter, guest posting, webminars, radio interviews and in person networking is an exception. Most marketers I know rarely use more than 2 or 3 client generating methods, and rarely track their advertising, and even more rarely, using a CRM software/system.

    Did you notice this as well?

    • Yes, I agree and in the post I’ve mentioned that even if it looks like you have 6 or 7 marketing avenues, if you back it up a bit, they are usually extensions of only 2 or 3. Staying focused on what works is totally the way to be more efficient and spend your time wisely.

      And marketers who don’t track their results, aren’t walking the talk. They won’t be considered go-to experts for very long if they can’t prove they know how to get results!

  10. Okay, let me see if I get this.

    Time is money. And for the person who has more time than money, time can be used as a substitute for money, but be sure you are not paying too much.

    Am I really worth $50 an hour? I think that is the big question in my mind. If I need to learn almost everything, maybe I should pay myself less, at first? Ha.

    On the other hand, getting a housekeeper would be a huge bargain, eh?

    • Katharine, you’re probably worth much more than $50 per hour. How much do you want to take home per hour? That’s the metric I want you to be thinking about here. Your billable rate may be 2 times that, or more. Don’t undervalue your time! Else you’ll get caught up in the lowest price conundrum…and it takes a long time to get out!

  11. Hey Ms. Jessica! You are the only person out there talking about this in plain, clear terms, made for the home business owner. I wish someone had laid it out so clearly for me when I first started my own business. Where have you been all of my business life?
    I meet so many home business owners freaking out about this type of stuff and the only information you can get on business plans and how to make one fit for a home business owner is written in Corporate lingo that’s scary for us small guys! I met a guy once who was freaking out because his uncle was bothering him about his “5-year projection” and his financial “milestones” for his brand new online business and the guy was only in his first week of business! The Uncle projected all this gloom and doom for him because he didn’t have a five-year business plan written out corporate style! But who can make a 5 year business plan when you’re not even sure if the business model will work? Jeez! See what I mean Jessica?
    Even myself, when I first started out in business, people kept telling me left and right, “all new businesses fail in their first 5 years because they don’t have a business plan, you need to make a business plan first.” So I foolishly spent over a $1,000 dollars to take some 6-month long course on business plan writing and I learned a bunch of nothing! None of it was useful or practical for me and my home business. It was all this corporate lingo and corporate financial projections that I struggled with for a long time and finally gave up on. In the end, I just ended up going back to Excel and a spreadsheet and that became my business plan. I wish back then I had seen your handy, down-to-earth guide. There is a great need for quality information like this, custom-made and easy-to-understand for the home business owner. Seriously, Ms. Jessica, where have you been all my business life???

    • Wow Jennifer, thank you for the rousing endorsement! We work with growing businesses too…so maybe there is still room for me in your business life 🙂

      I believe in business plans (it’s what I do, after all) but if you’re not looking for financing, you don’t need the conventional 40-page tome. There are lots of creative ways to write a business plan that you’ll actually /use/ – and it starts with a clear definition of who your ideal customer is. And even that will change over time. I’m happy to talk to you about the “write” way to create a business plan – feel free to connect!

  12. Hi Jessica! : )

    Well, you’ve done it. My knees are officially bruised because your post literally brought me to my knees. Quite honestly, I had not viewed marketing in this way. “If you’re not spending money, you’re spending time.” OUCH!

    You quite clearly reinforce that old saying, “Time is money!” Thank you for such an eye opening post. Wonderful job!

    • I hope I’ve helped you begin to reframe the value of your own time, Lynn. Glad you enjoyed the post! Feel free to reach out to discuss it anytime 🙂

  13. Great post Jessica. I’m an equine professional, and it’s a running joke that none of us who work with horses ever want to figure out our hourly rate. So much time spent on the “support” side of the actual money making endeavors such as teaching or training. We may charge $50 for a 45 minute lesson, but there’s always so much more than just those 45 minutes involved. Your advice applies to a lot more than just marketing, a good cost/benefit analysis of each of our activities is a useful exercise; once we make the time for it. Thanks for sharing your viewpoint, it’s always great to have a reminder.

  14. Yes, I concur and in the post I’ve said that regardless of the possibility that it would appear that you have 6 or 7 promoting boulevards, when you back it up a spot, they are typically amplifications of just 2 or 3. Staying concentrated on what lives up to expectations is absolutely the best approach to be more productive and invest your time sagaciously.

    Furthermore advertisers who don’t track their outcomes, aren’t strolling the discussion. They won’t be recognized go-to masters for quite long in the event that they can’t demonstrate they know how to get results!

  15. Excellent post! I went through exactly that “where did my clients ACTUALLY come from?” exercise last week, and it’s caused me to completely re-think my marketing/branding effort. And you’re right – we’re bombarded by marketing information and no one ever talks about the REAL cost (in time) of the various ways we attempt to gather clients via social media.

    Thanks again!

    Jeff

  16. Great post. Many people don’t realize how much time and where they spend it on their marketing efforts which ultimately costs them money.Thanks a lot for the awesome Post.
    Mist Read it and Share it.

  17. Great article Jessica. I love your “voice” as well. Bravo.

    I don’t like the saying “time is money” because time is infinitely MORE valuable than money.

    Think about that.

  18. Pingback: The Real Cost of Promoting a Home-Based Business | Gary Schollmeier Blog

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