You probably want more business for your practice, and almost certainly want to do more business with higher value and more challenging client cases.
Well, something has to change. Something has to be done differently to get those opportunities. That something is “marketing”. Your marketing has to change.
I am not going to suggest here that you need to change tactics necessarily (though that may well be true). We are not going to debate the merits of trade shows versus social media or whatever. There is a far more fundamental question that too many professionals struggle with, and that is: “how much needs to be invested in marketing to get substantially better results?”
Or as I prefer to put it: “Is your marketing budget as big as your dream?”
Marketing experts certainly agree that smaller or newer enterprises need to allocate a lot more – perhaps double the amount – that their larger competition allocate to marketing. That makes sense of course as there is a lot of ground to make up if you are a small firm wanting to become a big firm. So a rule of thumb from the marketing industry for the small firm is that you need to spend between 12% and 20% of your gross revenue on marketing to start making some serious inroads.
These ratio’s certainly hold true when one considers some of the findings from research into what makes the most successful advisory practices different to the ordinary ones.
Top end advisory firms of course are “established” businesses most of the time and just over 70% of them spend allocate between 3% and 9% of gross turnover to ongoing marketing. About another 20% or so spend more than 10% of gross revenue on marketing.
So over 90% of the most successful advisory firms are allocating a serious proportion of gross revenue (3%-10% +) on marketing.
I compare that to many smaller practices or individual professionals running what one might call “lifestyle businesses”, and usually when I ask what allocation they have for their future marketing the answer is 1% or 2%. That may be entirely adequate if there is no real desire to generate significant volumes of new business or to grow the practice any further. These are “lifestyle businesses” after all, and maintaining the status quo might be a reasonable business objective for some professionals.
For the aspirational however, something has to change!
If there is a dream to build the practice into something much more substantial then the willingness to invest in growth has to at least match the scale of the dream.
If exponential growth (however you choose to measure that) is the objective then the marketing budget has to be big enough to achieve it in the first place.
Obviously one has to be thoughtful and clever about where and how to use that resource to achieve the goals, but the first decision the aspirational business owner must make is how much to allocate to pursuing the dream.
For those who want exponential growth and are willing to do what is required to achieve it a marketing budget of around 20% of gross revenue is a starting point. More than that if you can afford to.
As Peter Drucker famously said: “All business is marketing”.
So make sure the amount you’re willing to commit to marketing matches the size of your business dreams. The two do go hand in hand.
Tony Vidler is a business adviser who helps business professionals build more profitable advice businesses. He is also a conference speaker, personal business mentor and sales coach. Find out more at http://tonyvidler.com/financial-adviser-coach-blog/