Are you tired of feeling like your marketing efforts are a black hole, swallowing your budget without spitting out significant returns? 

If you're ready to transform your marketing from a cost center to a profit generator, you're in the right place. We’ll start by breaking down what is an investment vs. an expense, doing so will be the key to shifting your mindset around marketing spend. We’ll then dive into how you can avoid costly mistakes by working with the right people (and even software) to make strategic spending decisions. Lastly, I’ll throw in a pro tip for how to create a marketing budget without putting a strain on your cashflow

Understanding Investment vs. Expense: Your First Step to Strategic Marketing Spending

Moving from an "expense-driven" to an "investment-driven" mindset can transform the way you think about marketing altogether. An expense is typically associated with an immediate cost that may provide an immediate value but has little to no ROI tied to it. For example, the immediate value of a ride-share expense is that it took you from point A to point B, and that’s about it. An investment on the other hand, is considered an investment because the money spent is expected to yield returns, even if they’re not immediate and even if they’re not completely financial in nature (could be time back or even bandwidth). Investments are aimed at generating future returns and building long-term value. It involves allocating resources (often finances) to activities that build enduring value and help you do more of what works, those things that move the needle forward. When I look back to the money spent on marketing my business, the moment I’m able to spot the direct return, the money spent goes from being an expense line item on my profit and loss report to being an investment into my business that directly correlates to my revenue, even when it’s not in the same period of time. I’ll give you 2 examples below:

Software: With an “investment-driven” mindset, money spent on a software like Enji yields you:

1. Access to marketing strategy, which gives you confidence, knowledge, and time back
2. An online presence on social media so you never take your foot off the gas, as I like to say
3. And most importantly, paying clients that could come from those marketing efforts on social media or via marketing campaigns that could turn a $29 monthly investment 100 times over with just a few paying clients (or just ONE!)

Networking: With an “investment-driven” mindset, money spent on networking, be it a local in-person event, a conference, or a monthly membership, yields you:

1. Access to other like-minded entrepreneurs whose weaknesses may be your strengths
2. Access to learn from others who may be a few years ahead of you, learning from their mistakes can save you time and money
3. Most importantly, simply getting in the room (whether in person or virtually), the connections you make today can propel you forward or even become paying clients, giving you a financial and tangible ROI right away or in the near future

Aside from having an "investment-driven" mindset, as a financial consultant, I also feel compelled to advise you to take calculated risks, set up a marketing budget (more on that later), and start with clear objectives and a long-term vision when allocating financial resources to your marketing efforts.

Avoid Costly Mistakes: Strategic Marketing Spending

Marketing our businesses can sometimes feel like throwing spaghetti at the wall, not really knowing what will stick. We feel it’s a lot of trial and error until we “figure out” what works. In the meantime, we may spend a lot of money on marketing efforts that yield no return. What if I told you there was a better way to avoid costly mistakes by working with the right people (and even software) to make strategic spending decisions?

Let’s take someone who thought every marketing effort was an investment. She thought, “If I could be in that room” or “invest in that membership” or “collaborate with such and such influencer”, then she’d be able to see a return on her investment, and that’d be the thing that’d move the needle forward. The problem was, the “room” was a generic marketing event, the “membership” was one she had not researched well and catered to the complete opposite clientele, and the “influencer” was someone who maybe was trending at the time but truly didn’t align with her brand values or target audience. The moral of the story is to research thoroughly before investing. Research could take on various forms; it could be:

• Talking with a fellow business owner who has maybe made a similar (or the same) investment and who may be able to give you some insight into what the “room”, “membership”, or whatever else looks like without you spending a dime
• Consulting with a business coach or a financial consultant who may be able to give you invaluable insight into what would be the best route to business growth and ROI. They may also be able to advise you as to when it’s time to invest and how much is a well-calculated amount, or when it’s time to pump the brakes for a bit and allocate resources elsewhere
• Doing internal research in your own business to see what has worked well in the past and where leads have come from will also maximize your chances at an ROI by doing more of what’s already working. If social media has been a great lead generator for your business, investing in a software like ENJI may be an investment that’ll help you continue to show up and maximize the ROI you can yield from social

A Practical Approach to a Marketing Budget for Small Businesses

You’ve probably heard of the book "Profit First”, while I won’t go into it here, I will use the same methodology for this marketing pro tip. “Profit First” basically takes all the money in one account and distributes it into separate accounts so that you’re able to see how much has been allocated to each purpose as opposed to seeing a single balance/bank account. Think of splitting your food into different plates as opposed to having one plate with all your food on it. We’ll apply that same process here. 

Start by setting up a percentage, however small, and committing it to a separate account. This may be a business savings account, the one that has barely any money and you keep forgetting to add money to it, that’s the one! 

Let’s say our percentage is 5% of every sale. We’re focused on setting up the system now, not so much the amount.

As sales come through, if possible, set up an automatic 5% transfer to your bank account. You could use Relay Bank for this or see if your existing bank offers this service. If you’re unable to create automatic transfers, set up a reminder so that at least once a week, you transfer over the percentage that correlates to the amount of money that came in that week.

For the first 3 months, let your money grow in there, transfer after transfer. 

After 3 months, see if you need to adjust the percentage, and if so, go ahead and do that. 

Having money set aside specifically for marketing efforts will help you take advantage of that next marketing opportunity with an “investment-driven” mindset, knowing that not only will you yield a return on it, but also that the money spent won’t affect your cash flow for that month. You’ll also make that investment in a strategic approach after thoroughly researching it, making sure you’re not just throwing money away never to be seen again. 

As you make this a practice in future quarters and years, this is something you can incorporate into your annual planning. The same way you have revenue goals, you can also have a percentage you’ll allocate to your marketing budget and then list out potential marketing efforts it could go towards and your expected ROI. 

Maximizing your marketing ROI isn't about blindly spending; it's about a fundamental shift in mindset. By recognizing the crucial difference between a fleeting expense and a strategic investment, you empower yourself to make informed decisions that cultivate long-term growth. Avoiding costly mistakes through thorough research and expert guidance, coupled with a proactive and cash-flow-conscious budgeting approach, will transform your marketing from a drain on resources into a powerful engine for real, measurable results. Stop throwing dollars into the void and start investing wisely – your bottom line will thank you.

Geily Romero is the founder of Cutting Edge Financial Solutions, a financial consultant, and a Fractional CFO who specializes in helping service-based small businesses nearing or making six figures master, manage, and multiply their cash flow to drive sustainable, long-term growth. She is also a Certified QuickBooks ProAdvisor, HoneyBook Partner, and Relay Certified Banking Partner. Geily offers top-tier financial expertise without the full-time commitment, helping entrepreneurs address profit and cash flow concerns effortlessly, implement sustainable growth practices, and stay prepared to overcome financial hurdles. From managing essential tasks like financial reporting and projections to crafting strategies for personal compensation and reserves, working with her is a game-changer for service-based entrepreneurs ready to go from surviving to thriving.

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