Marketing.
You know what it is, you see it every where you turn. It's billboards and magazine ads and radio commercials and more. There are so many ways you can market a business or a product, but most start up companies cannot afford half of them. Marketing can be expensive and it is definitely not discretionary if you want to succeed.
Since we're currently working on research and planning for a new business, this post will focus on what types of marketing you can do on a smaller budget as you're getting started. Right now, the most important thing for us to know is cost and return, so I will not be discussing branding or marketing messages in this post.
First and foremost, there are two things that are non-negotiable when you're starting a business: business cards and a website.
Business cards are pretty low cost, you can order them online for around $40 for 500 cards. When you're getting started, 500 cards will probably last you a good while. I like Printing for Less. They do good work, fast and reasonably priced. Plus they have a nifty pricing tool on their website, which will let you estimate the cost of a variety of printing projects. You will need to be able to easily get pricing when you're planning future campaigns.
A website is a little trickier to price out. If you've made it this far in your planning, you probably feel pretty good about your business idea. You've looked a lot at expenses and you have a good idea of how much money you're going to need to get this thing going. Hopefully you've also looked at the websites of other companies in your industry and have an idea of what you like and don't like. Your site can be as simple or as complex as you want. It is possible, with the tools that are available, that you could create a simple website yourself, even without web design experience. However, I will say there is usually a night and day difference between websites created by amateurs with free tools and websites created by professionals. Professional work costs money and you should shop around before making a commitment. WordPress is a very common platform for websites and is easy to update yourself once it is established. I would expect a WordPress based non-shopping cart site to cost around $1,500-3,000 to create professionally. The nice thing about hiring a pro is you can get really close to the website look you have envisioned for yourself. Free tools are very limited in what they will allow you to do with the overall look of the site. Let's estimate on the high side for our budget.
In addition to the basics, we need to plan for marketing for our business launch or Grand Opening. A retail location may want to put a good bit of marketing money into a Grand Opening to entice people to walk in. A service business is usually less traffic based, so a simple direct mail campaign to let them know you're in business may be enough.
For our dog walking business, we are going to utilize direct mail to launch our business. A few posts back, we narrowed down our market to a few zip codes in St. Louis. We determined there were 46,260 high-income households in this area. We also determined that only 46% were dog owners. Finally, we could only service 160 dogs per week. Direct mail has a response rate of about 3%. Meaning if we sent a mail piece to all 25,558 households, we could expect about 766 responses. Obviously that is more people than we can serve, so we need to narrow down our mailing list. We could start off with just one zip code to see how it goes. I usually buys my mailing lists from Info USA. They will allow you to buy lists for just mailing or for mailing and calling. When buying a list like this, you want to make sure to use a reputable company who collects and verifies the data themselves, otherwise you get information that is out of date and it is just money wasted.
When I start with zip code 63131 and narrow the household income to $60,000 and over and select people who own pets, the total households in that zip code drops from 9,058 households to 398. If I increase the area to include all three zip codes with the same criteria, it returns 768 leads. This is significantly lower than we estimated for the area, but still more customers than we need to fill our schedule. I would go ahead and plan to mail to all 768 leads, since we know they won't all respond to our advertisement. The list will cost $153.
Now, jump over to Printing for Less and use their handy calculator to determine the cost of printing 768 mailing pieces. They will even do the mailing work for you, which is very handy. Just make sure you check the box to include mailing in the price. It looks like we can send a postcard for about $400.
So, we now know if we can design the postcard ourselves, the direct mail campaign will cost $593 and we can expect 23 people (3%) to respond. Although with a specialized list of only pet owners, we may realize a higher response rate. That is a cost of $26 per customer. It's not outrageous assuming they become regular customers, but this calculation is something you always want to keep in mind when spending marketing dollars. You want to keep a good balance between effectiveness of your marketing and efficiency.
In addition, to a website and a direct mail campaign, you should also go ahead and setup your Facebook business page and join any local associations that apply to your business. You may also want to think about joining the Chamber of Commerce, which usually costs a couple hundred dollars per year, but provides lots of opportunities to meet other business people.
At this point, you will also want to plan out your on-going marketing campaigns. This can be a rough plan, but we need to have some numbers to include in the budget. For example, maybe you want to re-use your mailing list to send direct mail pieces every quarter, budget for more printing and mailing costs. Or you might want to place an ad in your local newspaper. Get their rate sheet and determine how often you want to advertise.
Ultimately for our business plan, we will need to lay out the financial picture for the first few years of business.
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