Once business has established themselves the next thing that the owner should focus on advertising. Advertising is influenced by many factors including how new a business is and how much competition the business has. For example, a company that is new will need to spend a lot more to get their name out there compared to a well established company.
To determine how much a business should spend on advertising the Schonfeld survey should be referenced. Schonfeld & Associates, Inc. has an annual publication which lists over 4,500 companies and advertising expenditures as a percent of their sales. This allows businesses to look at others in the same field and compare home much they are spending on advertising. Obtaining the complete Schonfeld report can be pricey but it is commonly found in local libraries and can be viewed free of charge.
If a copy of the Schonfeld report can not be found another option business owners can also use the “Rule-of-Thumb” specified by the Small Business Administration counsels. this rules indicates that for companies making less than $5 million in revenue should spendaround 7% of that on marketing, 5% on advertising. For example, if a business has a revenue of $1 million the total marketing cost would be around $70,000 while advertising would be around $50,000.most businesses spend more like 3.5% on advertising. Companies that make more that $5 million tend to spend more that the 7% for marketing and the 5% for advertising.