With the slow down in the economy and tightening of the financial markets, times are tough in the retail and Small Business sectors. This could potentially result in a number of business failures.

How do you protect your business from becoming one of the casualties? You have to operate better than you are today and better than your competition and there are only two ways to do that. You either sell more or spend less.

Let’s look at both sides of this equation, both selling and spending by your business. Both of these are impacted by Marketing or Advertising. Marketing and Advertising bring you clients to sell to, but they also cost you money. You know this, of course. But do you know exactly what it costs you to find a client to sell to? Do you know how many clients your marketing brings you? Do you know how much you sell to each client and what the return on your advertising is?

To make sure your business survives and thrives you need to know.

So how do you work it out?

Total sales last year divided by total customers = Total Sales per customer SPC
Total Advertising & Marketing Expenditure last year divided by Total Customers = Cost per acquisition CPA (Include existing clients as they are also included in the total sales number)

Simply, if Total Sales per customer is not much higher that Cost per acquisition, you are in trouble. This figure SPC – CPA should be well below your estimated profit margin. If it’s not, then you need to work on it.

What can you do? Get better at marketing, insure your marketing dollar is working for you and delivering you clients, and ensure you are making the most of your on line prescence.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au