Setting Your Budget With The Percentage of Sales Method - and Why I Wouldn't Recommend ItI'm including the percentage of sales method as I've seen it recommended on other marketing sites for use by small business owners (yes, that includes you!). However, I don't personally recommend it for you, and here's why: The percentage of sales method means that you set a budget as a percentage of your intended 'sales'. So, say you want 50 new frontline distributors (these are your sales) to join you this year and they are worth £50 each to you in income from the sign up (we'll ignore future volume for this example). That means you have targeted for £2,500 of new sign up income this year. I appreciate you can't retire on this, but bear with me as it makes the maths easy! If you were using the percentage of sales method to set your budget, you would fix a percentage of the £2,500 for your marketing. In this example we'll use 10%, so that gives you a marketing budget of £250 a year, or roughly £20 a month. Now, that may not seem too bad, but what if your income goals were alot higher than that? And I assume that you'd like a little more than £2,500 a year in income? Use exactly the same method for your retail sales too. Alot of companies have a minimum monthly volume so that you remain a qualified distributor. Let's assume that you need to sell £500 a month in retail sales to meet your company's minimum volume requirements. Taking the same 10% again, that would mean a marketing budget for your retail business of £50 a month. But what if you want a larger retail business? I spoke to someone recently and was amazed, and incredibly impressed, to hear that she had a retail volume of just over £50,000 a year! 10% of that is £5,000, which is about £416 a month. This wouldn't really cause a problem if you were already making the income to fulfil that marketing budget. But what if you were starting out and £50,000 a year in personal retail volume was your goal? Do you see the problem? You could find that your marketing budget gets set way too high, and gives you no flexibility. This approach works for high volume manufacturers, but not really for the likes of us. When you are running a small, home based business (or even a large home based business), budget flexibility is key. You need to set one, but you absolutely want to have control over it. It's your money you are spending, not that of some large corporation! By all means, if you'd like to use this method of setting your marketing budget, then feel free - it's your business and ultimately your choice. Different budget setting methods suit different types and sizes of companies. This one tends to suit the larger companies better - so maybe it's something to aspire to as you build your business! Let's concentrate on budget marketing and free marketing methods first shall we?!
Check out the Budget Marketing Method
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