Have you guys seen tv shows like Hotel Impossible or Restaurant Impossible where it’s revealed that the shop owner is half a million dollars in debt and about to lose his shop, home, and family, and when the host asks for financial details he learns things like this:
invested $$$$ in shop first year
brought in $ revenue first year
purchased equipment for $$$$ second year
brought in $ revenue second year
spent $$$$ on painting shop and new furniture third year
brought in $ revenue third year
and you’re sitting there yelling at the tv “why the F#$% are you spending all this money when you have no sales”?
That’s always me. I always wonder what kind of magical thinking is required for people to keep throwing cash out the door thinking that it will turn the business around.
Well, now I own a small shop. No, I haven’t done this, but I’m starting to see how it’s possible. What I’m looking at for my shop is the fact that without investing in marketing, my shop will go nowhere. Some gentle probing has granted me some marketing quotes: $500 to advertise on a review site, $2000 for a featured review on a blogger’s site, etc. So what I’m puzzling out now is how to know if any of those expenditures would actually result in sales. Also how do you judge return on marketing investment as a small business?
Anybody here deal with this problem?