Why you shouldn’t pay attention to your marketing budget
Budgets aren’t inherently bad (at all!), but adhering too strictly to one can be
•Ask yourself this question when evaluating an investment of your time and/or money: ‘What ROI do I need, and in what time frame, in order for this to be a smart investment?’
•A budget does not apply to revenue-producing investment opportunities; budgets are valuable for fixed expenses like staff, office, meals and entertainment, travel, website, events and so on.
•The no. 1 skill in business is knowing how to spend your money to grow your business and keep you profitable.
“What return do I need to get from this investment, and in what time frame, in order for this to be a smart investment for my business?”
This is the question you need to ask yourself when you come across any product or service that requires an investment of your time and money.
Notice that the question is not “Does this fit into my budget?”
Because here is a philosophy that all smart businessowners know:
Nothing is too expensive. It’s all about investments.
Every investment is either a smart investment or a dumb investment.
When it comes to investments that directly provide monetary returns, the smart businessowner understands that nothing is too expensive.
Even if there isn’t cash in the bank or enough room on the credit card, if he knows in his heart, head and gut that an investment will help his business grow in the direction he wants to go — then he should figure out how to get the money and make the investment!
I’m not saying that budgets are bad. Budgets are essential for every business for all investments that do not directly return money.
Things you need a budget for:
1.Salaries and wages for staff
2.Office expenses for rent, equipment and utilities
3.Meals and entertainment, including coffees, lunches, dinners, snacks, client nights and so on
4.Events, including conferences, trade shows, local events and so on
5.Your website: servers, hosting, upgrades, SEO
6.Software tools, including your CRM (customer relationship manager), social media management, document management and so on
7.Other fixed costs, including bank fees, legal fees, car expenses, accounting, phone, internet and travel
8.Client appreciation, including post-sale gifts, parties and so on
Notice that there is no budget for:
3.Lead generation expenses
4.Advertising client properties
Because the four business expenses above are directly tied to revenue.
Does this mean you should invest in everything that falls within those four categories? Heck, no!
What to spend and where to spend it
If the majority of your business comes from relationships and referrals, then the majority of your investments in prospecting, marketing and advertising should be relationship-based. Spending money on advertising and lead generation is counter-intuitive.
However, if you’re killing it in the lead generation game, then double down on advertising, landing page optimization, lead response, lead nurturing, email marketing and system optimization. On the flip side, cut out print marketing, door-knocking, cold prospecting — and even curb your organic social media posting.
budget for real estate
Now, if you’re a people person, then you need to invest in tools and systems that get you in front of people, face-to-face.
This could include a fast and simple CRM, social media automation and items of value to give people that give you a mechanism to say “hello.”
What this also means is that you will likely benefit from saving money you might otherwise spend on having a fancy website. Find the most inexpensive but professional website provider, and use that money for database building and sphere-of-influence development.
On the flip side, if you’re an introvert, then I would focus on blogging, social media, email marketing, online lead generation and an amazing website.
Understanding what investments to make in those four categories is what separates world-class real estate professionals making six- and seven-figure incomes from the Realtors who will fail in five years.
Let me repeat this, because it seriously is the most important realization for your business:
Real estate agents who can figure out which investments to make to acquire clients and sell homes are the ones who succeed in real estate.
That’s it. This is the skill to master in business.
And any agent who creates a budget for prospecting tools, marketing tools, lead generation expenses and client advertising is doomed to mediocrity and is increasing the chance of them failing in this industry.
A philosophy for every business
This philosophy is not even just for real estate — it’s for every business in the world.
Now, if you disagree with this statement, I’d love to hear why in the comments.
However: Why do you think all the biggest companies in the world go into debt, raise money and go public? It’s because they are constantly going over budget to increase their business.
And just look at the Realtors who make high six-figures and seven-figures and have healthy profits.
They spend lots of money, but all their investments are smart and give them a positive ROI (return on investment).
Are there agents who spend lots of money, and lose money, and fail, and leave the industry?
Yes, 100 percent! They suck at budgeting for non-revenue producing activities, and they suck at figuring out what investments to make that will increase their revenue.
I’ve put together a marketing budget template and guide on how to use it for real estate agents — you can find it here.
If you want to learn how to spend money effectively and master the art of sales forecasting and budgeting, you can read my next post: “7 tips to help you master the skill of spending your money.”