What Percentage of Your Resources Should You Invest in Marketing

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invest in marketing

P.T. Barnum, the founder of Barnum & Bailey Circus, once said: “Without promotion something terrible happens. Nothing.” Any small business can learn from what P.T. Barnum did to promote the circus to promote their own business.

What happens without promotion

I have a geologist friend who suggests the natural state of everything is decay. We usually get into these discussions out in the middle of nowhere looking at some obscure rock formation or the sandstone stratification of the petrified sand dunes in the Southern Utah deserts.

We talk about dinosaurs, early mammals, what this place or that place must have looked like with the huge mounds of blowing sand.

We imagine what it must have been like to see the fresh footprints in the mud we’re looking at, and the reaction we might have had then, rather than how we feel looking at the petrified impressions of dinosaur footprints millions of years later in the stone we’re admiring now.

When anything is left to it’s own devices, he argues, it eventually starts to decay—that’s the natural state. The rate of decay is different for everything. Nevertheless, rock turns to sand, sand sometimes becomes sandstone, and most of the time bones become dust.

He’ll even start waxing poetic as he describes how even living things are in a state of decay. Our bodies decay as they get older, plants, animals, everything—even businesses (I added the last one).

Without promotion, it’s difficult to maintain the status quo and almost impossible to sustain growth. Promotion, or marketing, is the lifeblood that keeps businesses alive and allows them to thrive and grow. For a business, without promotion, something more terrible than nothing can happen… decline and decay.

How Much Should You Invest in Marketing for Your Business

A hundred years ago, once the colorful circus train would arrive in a town, Barnum would parade his menagerie of exotic elephants, giraffes, lions, tigers, clowns, and acrobats through Main Street, plastering billboards along the way, leading children and the rest of the town to where the Circus Tent was being erected for everyone to watch.

The beautiful train, the billboards, the parade, and even the tent were all part of how he promoted the circus. He knew that if he quietly set up outside of town, nobody would notice and he would have a circus tent full of empty seats.

The same is true for your business. It’s not as simple as, “If you build it they will come.”

You need to do everything you can to make sure your customers know about you and your business —and more importantly, what you can do for them.

The marketing rule of thumb for how much money to spend on marketing is considered five percent of gross revenue to maintain and around 10 percent to grow, but we can all learn even more from Mr. Barnum about how to squeeze the most out of every marketing dollar:

1. The town knew the circus was coming

Before the train arrived, everyone knew the circus was coming to town. The advance team made sure it was no secret; the Greatest Show On Earth would be there soon. You should be working to do the same.

Do your potential customers know about you? Joining local trade groups, the Chamber of Commerce, or other networking groups might be inexpensive (yet effective) ways to let your community know about you and your business.

2. Barnum took advantage of natural opportunities to promote

He could have quietly pulled into town and set up the tent, but he made getting to the circus site a big production so he could get everyone excited about it. This is another lesson the average small business owner should take to heart.

Are there things you need to do that you could use to market your business? Have you ever thought of posting a video of how you make your widgets on YouTube or how you make your signature dish? There’s a local restaurant where I live with the kitchen in plain view so you can watch your meal being made. They make it a production.

There’s really nothing exciting about watching workmen put a tent, but Barnum made it thrilling to watch the circus tent go up—there are similar opportunities in your business.

3. He used colorful billboards and handbills to advertise the circus

Billboards or handbills may or may not be the best way to market your business, but social media, online advertising, and direct mail make it easier than ever for small businesses to reach out to their customers with special offers and promotions. This medium is also a perfect way to establish your business as the expert and set itself apart from the competition.

For example, there are myriad online tools to help you launch email–marketing campaigns like Constant Contact or MailChimp (you need to investigate these yourself to determine the one that will work best for you and your business), and you don’t necessarily need to hire an expensive agency to reach out to your customers in the mail.

My partners and I would send a weekly postcard to our customers that was very inexpensive, but very effective, and kept our phones ringing. It doesn’t need to cost a lot to be very effective.

4. Everyone in the circus was a walking advertisement

It was important that the acrobats, the clowns, and all the animals looked like they belonged in the circus as they paraded through town. In other words, they were ready for business.

I learned this as a young man driving the delivery truck and sweeping the floor in my father’s small business, he would often remind me that for many of our customers, I was the person they would see the most. Even though I wasn’t a salesman, everyone in our company was really a salesman. Is that the culture in your business?

Marketing is an important part of building a strong and healthy business. How much should you devote to marketing? Maybe the real question is: “how much can I afford not to invest?”

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