Last month a friend referred me to a business owner wanting to sell his company. His primary motivation was he’s burned out and the driving force for the burn out is 2015 was not a good year financially. Sales were down from 2014 and expenses were up. His balance sheet is a mess. But this is not the point of the story.
The point is he did some reading, probably online, and had his P&L all marked up with notations on all the expenses that “really aren’t expenses but are profit.” It included the usual suspects like his salary, his wife’s salary, benefits, car (used to make sales calls), etc.
One that struck me is something I see every so often and it’s marketing expense. He figured because a $30,000 marketing campaign didn’t work it really wasn’t an expense but should be considered profit. A number of years ago I spent $5-7,000 on Google Adwords and similar from Bing and Yahoo. Not one call; lots of voyeurs. And the last time I looked, that money wasn’t on my bottom line, it was Google’s (and others) bank account.
The flipside is if the marketing campaign had worked would this owner take away the revenue and profit it generated? Growing a business is not easy. Congratulations to those who do it. It takes time, money, and skill. Marketing strategies have to be tried and you have to realize they won’t all work.
If you don’t try a few how will you know what does, and will, work?
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” John Wanamaker