Weighing the Benefits of a Marketing Budget
In difficult economic times, many small businesses are forced to make difficult choices regarding their budgets. And while it may seem like a relatively easy choice to cut a marketing and advertising initiative before many other alternatives, the results – according to some within the Northern Arizona business community – could be devastating.
In the view of Joe Bodin, a small business owner who runs a marketing agency known as FlagstaffCentral.com, the decision about whether to market or not is often a question of life or death for a small business.
“A lot of people who realized what was happening took the bull by the horns and actually did more marketing,” Bodin said. “Because the more marketing you do, you get that one percent extra client and it keeps you alive. While the ones who turned around and said, ‘Oh my god, I don’t have the money!’ and cut back on their marketing – to be honest – the large majority of them are now out of business.”
Rob Turnwall is the president of the Show Low Chamber of Commerce and the manager of the J.C. Penney store located in the city. Turnwall says that while a national corporation handles his store’s marketing, he thinks it is important for other businesses to stay relevant to customers.
“I think it’s a big mistake not to market, especially when the economy is down,” Turnwall said. “You have to keep your name out there; you have to keep your name familiar with people.”
As the common sports saying goes, sometimes the best defense is a good offense. Turnwall said small businesses in small communities such as Show Low and Flagstaff need to stay on the attack when it comes to attracting and retaining customers.
“I think you have to be more aggressive when the economy’s down than when it’s flying,” Turnwall said. “I think the biggest thing is to keep your customers familiar with you. You don’t ever want them to go away, because they might never come back — especially if you’re a small business.”
Small businesses in Northern Arizona have to compete with each other, Bodin said.
“The majority of small businesses are riding on a five or ten percent profit margin, where they only make ‘X’ amout of dollars above their expenses to stay alive,” Bodin said. “And if you cut back on your marketing, you’ll have less income coming in, and that, in itself, can be enough to put you out of business.”
Creating a hypothetical comparison of two similar businesses, Bodin says the one to invest in marketing was more likely to grab a greater share of the market and, therefore, stave off bankruptcy and financial duress.
“If you have two businesses that sell the same stuff, the guy who does the little bit of extra marketing and gets that one or two percent extra business pays for the marketing dollars and has enough to keep him alive,” Bodin said. “As opposed to the guy who sells the same stuff and saves his marketing dollar loses that one, two or five percent [extra business]. That can be their entire profit margin, and can put them out of business.”
Mike Masek owns The Forager’s Path, an herbal medicine school in Flagstaff with an online component that reaches across the Northern Arizona region and, in fact, the world. Masek said that without the intervention of some advice years ago, he would have likely made the decision to let his marketing budget go.
“Well, it’s definitely something I’ve considered, for sure,” Masek said. “Several years ago, I remember reading about the importance of marketing during difficult economic times. So, when the economy went south a year or two ago, it was real obvious that I had to continue marketing – I couldn’t pull back there.”
Masek says he has seen the consequences of a decision not to have a marketing budget firsthand.
“I do have one friend, another small business owner, who pulled back,” Masek said. “After a couple of months, his business started to go down. So, he went right back and increased his marketing.”
Turnwall says he is aware many businesses struggle to make ends meet in the current economy, and said he understands the temptation to cut a marketing budget can be strong when every cent counts. But, in the end, he says falling for that temptation never turns out to be worth it.
“Everyone has to watch their budget, and you have to tighten up your belt in lean times,” Turnwall said. “But, you have to be really careful, too, because you could tighten it up so tight that people just forget about you.”
“It’s a huge mistake to let up on the gas.” FBN