A budget can’t simply focus on cost control. It must also understand the top line dynamic in revenues. Its dangerous to think that if the top line isn’t growing you should allocate more money to advertising and marketing. Sometimes the message is getting out there, but it takes time to resonate with the market. Other times, the message may be getting lost in the marketplace. This can be due to unfocused or ineffective marketing campaigns.
The best way to identify why your marketing campaigns may not be leading to sales is through customer research, including focus groups. Start by informally interviewing a handful of potential customers to see why you have not been able to successfully convert them as customers. If they offer valuable insights, attempt to validate your findings across a larger sampling of respondents. If your informal conversations don’t yield any results, reach out through other means, such as social media. Offer incentives for participation, such as a Starbucks gift card.
Once you’ve conducted customer research to see the effectiveness of your marketing campaigns, reevaluate your sales plan. It might take longer to convert sales than you originally expected. If the conversion process takes 6 months as opposed to your original estimate of 3 months, its important to update your budget accordingly. This could mean the need for more capital.