Questions

What are some best practices for building out a budget (small-medium) and then implementing that budget and tracking the success?

Let's say for example we have 30k we want to reinvest into our startup company, and the purpose of the budget is to make sure they help us reach our goals for summer 2017. How do we go about building those out so they are successful and not just like "well we will spend money here, here and here and hope for the best"? Any tools I could look at or articles I could read?

3answers

I don't have any tools or articles off the top of my head, but I can share some tips on evaluating decisions like this.

I think there are two key questions to answer when evaluating investment decisions like this. First, what is my outcome I hope to get? Secondly, are there any objective metrics I can use to evaluate whether I've achieved that outcome?

The first question is to help bring clarity on why you are making the investment. For example, if you decided to invest $30,000 in marketing for your company, you could do that a lot different ways. In order to deploy those funds most effectively, you need to be clear on the outcome you are trying to get. Is that outcome more awareness of your brand? Or is it to generate new business in the near term? The first objective would lead to one type of marketing, perhaps targeting advertising. The second objective might lead you instead to a lead generation program, perhaps by hiring a third party lead gen firm.

Once you've answered the first question, you can move on the second one regarding metrics. This question is important because it leads you to how you are going to measure and hold your organization accountable for the success of the investment.

So if you are investing in a lead gen program, you need to quantify how many incremental qualified leads the program should generate which then lead to X number of new customers which leads to X amount of new business. Then you can decide if it's a good investment before you spend the money, and you have an objective measure of whether it's successful as it progresses.

Keep in mind that not everything will have objective measures of success. For example, if you are investing in a branding awareness program, it's going to be much harder to measure that success objectively. However, you should still try to have some measure or idea of what success looks like at the end of that investment. In this example, perhaps the firm handling the campaign has some measures they can track based on their experience of whether the campaign was successful.

I think answering these two questions before you spend any money within your organization is important, not just major investments. It's a little mental math you should go through in your head each time something new comes up. Why am I doing this (what outcome do I hope to achieve, what needle will this move) and how will I know if it's successful? Sometimes it just 30 seconds in your head, sometimes you get the management team together and talk it out.

Hope this is helpful.


Answered 5 years ago

A cash flow report forces you prove out what you expect to happen with the revenue coming in and how the expenses are being used. You then can measure your daily or monthly progress against that.


Answered 5 years ago

This is highly dependent on many factors. Clarify your question with the following specifics + likely someone can assist you. The more specific your question, the more specific + useful answers you'll receive.

1) You specific goals + how they're measured.

For example, there's a big difference between having a large customer list + an profitable customer list.

2) You customer demographics.

Male/Female. Chronological age. Etc...

3) Your client psychographics.

Why they buy, which surfaces the problem you're solving for them.

4) Your product/service/info.

What you're selling + it's price point + it's repeat purchase cycle.

You might be surprised at the massive profit you can generate by simply attending Meetup Groups yourself + giving a correct (benefit centric) introduction.

Then spending you $30K hiring good looking people to do the same in many Meetups in your area.

You can also use this same approach with any speaking circuit type system, like WordCamp or any industry trade show.

In general, if you require investing huge amounts of money to make money, scaling can be complex.

If you can spend near $0 + produce massive profit, then scaling becomes smooth + easy.

I've done it both ways.

I suggest you stick with smooth + easy.


Answered 5 years ago

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