Ask SmallBiz: Budgeting
By Caroline Kim, Honolulu Center Director, Hawaii Small Business Development
Q. I have a very small business with shallow pockets. Given the current economy, I am thinking of saving the money I originally designated for marketing and staff development/training for a rainy day. What are the pros and cons of doing this?
A. Do something good for your business today. Don’t let doom and gloom invade your psyche. Now is a perfect time to re-examine your business policies and practices, among them, the idea of keeping your faithful customers.
Most businesses spend a lot on marketing. Add staff time and other resources and that equals a significant part of any business’ budget. Statistics verify the cost of losing a single customer is four times higher than the cost of getting that same customer.
Today, you should start thinking about your customer-service model. Measure if you and your staff: • have met your customers’ expectations; • have kept your promises; • treat customers as individuals; • listen to their needs; • make it easy to do business with you; • ensure that the physical parts of your business give a favorable impression.
Take time to assess these items, remembering every decision has pros and cons. Then do something, whether it is a discount to bring them back to the store, or targeted marketing to current customers — no matter how small your marketing budget.
For staff development money: re-train staff yourself by involving them in your marketing assessment, teach them how to implement any findings that would keep your customers and ask for their help in developing the new messages. You will give them new skills.
The big downside of trying to save, rather than spend the money you already budgeted?
You provide an opening for your competition to fill the gap as they market to your customers. You might save money, but will the savings be sufficient to earn another customer?
Strengthen your business by developing ways to make your customers steadfastly loyal, while training your employees at the same time.