How To Budget For Success

Set Financial Goals

Did you know that homebased business owners have higher household incomes than the average American worker and that a large percentage earn six-figure incomes? Marketing is an investment in the future success of your homebased business and should be considered an operating expense to be factored into your pricing structure. Set strong financial goals, and use sales and marketing programs to generate leads and sales that will get you where you want to go.

One rule of thumb is that you'll need to earn at least one-third more as an independent home business owner than you did as an employee to realize the same salary. (And, of course, as your business grows and you hire independent contractors or employees, the amount you project in earnings must increase proportionately.) In many cases, you can expect your marketing costs to draw against a higher percentage of your gross income during the start-up phase of your homebased business.

That was clearly the case for Ken Norkin of Takoma Park, Maryland, a successful advertising agency copywriter who decided to strike out on his own. When Norkin started his business in 1991, he wanted to position himself as a business-to-business, high-technology copywriter who could make short work of complex assignments. He targeted advertising agencies, design studios and select local corporations and associations in the Washington, DC, area. Norkin decided his best marketing tool would be oversized postcards. For a start-up investment of about $1,500, he created 5-by-7 cards that were creative, clever and funny, with a different card for each target audience. He sent an initial mailing of several hundred cards, and then repeated the process periodically throughout the year.

Norkin's investment was amply rewarded. Two days after his first mailing, Norkin got a response from an advertising agency that became a client--and has been ever since. Over the past eight years, that client alone has generated hundreds of thousands of dollars in sales for Norkin.

But what if your start-up marketing program requires more than several thousand dollars? What if you need half a million or more to reach your market? That was the challenge for the founders of Atomic Web Inc., which created a turnkey Web site development tool for businesses and individuals called website 2 Go, which includes e-mail, a complete statistical package of tracking tools and support, and Web site hosting. The four partners, Steve Chambers, Lynn Van der Veer, Don Dailey and David Dear, who each work from their own home offices in the Washington, DC area, needed half a million to a million dollars to work on their service full time and test a major marketing program.

The partners were initially turned down for loans by several banks. But they had two things going for them. Their product was unique in the market--a drycleaning business, for example, could use their service and have a custom site up in hours without having to write its own content--and they were in a high-tech industry, which made them attractive to entrepreneurs with venture capital. They enlisted the services of an investment broker who helped them define their goals and arranged meetings for the team with potential investors. Ultimately, the partners secured their start-up funds by signing an agreement with an investor who was starting an incubator. The investor and the broker received stock in Atomic Web in exchange for the funding, and the partners also received stock in the other companies in the incubator. This encourages all members of the incubator to contribute to each other's success. With their funds in hand, the Atomic Web partners are taking website 2 Go to select markets in anticipation of a successful national roll out.

Kim Gordon is the owner of National Marketing Federation and is a multifaceted marketing expert, speaker, author and media spokesperson. Her latest book is Maximum Marketing, Minimum Dollars.
Loading the player ...

3 Keys to Getting Better, More Restful Sleep

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories