Completing the circuit

It was pointed out nicely today that I have been absent from my blog post. Not that many people actually read my rantings and ravings but for those few that do, no, I did not die. But rather I came to the realization some time ago that business is much like life in that the more self-sufficient you can be the better your chances for success. So, with that in mind I set about making it happen...we have the WPM Group which provides consulting and full-service advertising...we have iAdvertizing.com which provides companies with high-quality, affordable marketing and advertising, and now we have__________________(the project I've been working on). This new project is something that I just have to keep under wraps for right now as it's a potential game changer for the outdoors industry. It has to do with what I've done for the major part of my professional adult life. It is the missing piece to the puzzle for the other two entities mentioned above. It helps to complete the circuit by taking the strengths from the divisions we already have and brings business to them...we won't be totally depending on outside sources to make our markets for us. I would encourage those of you who have staked your own claim in the world of business to think along the same lines. What can you do that will help lessen your dependence on other business referral sources. What can you add to your offering that will bring more business to your door automatically. I'll be on the road for the next little while but when I am back in the office and fully re-engaged I'll throw back the curtain on this "venture" and connect the dots for those of you who are interested. I really think you'll like what you see! I know I do, so far!

Best Always,
Dave J.

Calculating Your Ad Budget

One of the best pieces I've ever read about calculating an ad budget was passed on to me in early 2003. Rather than using the old 5-6% of sales measure for creating my ad budget, I've used the following formula and it's been terrific!

First, before starting (and I know this is business 101 for most of you but please bear with me.

MARGIN is Gross profit divided by Gross Sales Volume

MARKUP is Gross Profit divided by Cost of Goods

Be sure to plug in MARKUP, not MARGIN when figuring your ad budget. Let's say that you have a business averaging 100% markup (keystone) or in other words a 50% Gross Profit Margin.

Take that and multiply the average markup by your cost of exposure...for most businesses the cost of exposure is = to a percentage of your projected sales. I use 10%.

So, if my projected sales are $300,000 per quarter the ad budget calculation looks like this:

30,000 x 100% = $30,000

Now, take that $30,000 number and subtract out your cost of exposure..your website, storefront, rent, etc. for the quarter. Let's say that's $7,500.00

$30,000 - $7,500 = $22,500 and there's your ad budget for the quarter.

if, however, my average markup is only 86% it would shake out as follows:

30,000 x 86% = $25,800

$25,800 - $7,500 = $18,300 remaining for ad budget.

It's a simple formula and while not every simple formula such as this is going to fit every business you can modify it so that it can provide a "make sense" number for you in these otherwise very confusing times...and if nothing else, you have a firm number in mind when shopping for the various marketing/advertising options out there that you can choose from. I do hope that this helps...it's what I use and it hasn't failed me yet!

Best Always,
Dave J.