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The marketing budget

Posted on Wednesday, September 26, 2018 by Craig Harwood


So this can be like a piece of string - how much you should invest in marketing depends entirely on what you want to achieve. 

First we would look at what stage of businesses your in ie



  1. A new business in growth stage
  2. A mature business expanding
  3. Or maintaining a relatively small growth 

Notice there is really no stage that a business should not be investing in marketing to gain some growth - you are either green and growing or ripe and rotting. Even a mature business needs to keep ahead of natural patient attrition and grow enough to cover rising operating costs and inflation.

The next step is pull out that monthly profit and loss statement from your accountant or book keeper and your budget vs actual reports. aargh I hear you say, "we only do that once a year".  The bottom line is when a client is working with our coaching team we look at those figures every month, so let's get started. 

Your marketing costs are just like any other cost in the business such as electricity, rent, equipment leasing etc. and need to be budgeted for and included in the cost of your production, however with a twist. Your marketing expense operates in reverse to most other expenses. in order to increase your profitability you want to consider increasing this expense rather than decreasing it. 

Marketing is the fuel for business growth and when you understand the dynamics of how much marketing spend it takes to achieve a new patient then it becomes so much easier to dial up your marketing to the correct level for the number of patients you want to achieve. 

So for instance a new business is going to spend a much higher proportion of their turnover in the first few months because the marketing expense precedes the sale. Over the first year however it's likely to come back to around 18% - 20% of turnover.  A mature growing business is likely to spend in the vicinity of 8% - 10% of turnover and while a mainating business is still going to need to spend 3 - 5 % of turnover just to keep pace with attrition and rising costs.       

The next question then becomes, so I know how much I'm going to spend, so exactly how and where should I spend it to gain the greatest benefit. We'll cover that next time.  

Stay tuned for our up coming webinar on patient profitability and understanding your marketing mix. 



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