Do you know the lifetime value of a new client or sale?
Have you ever calculated exactly how much money you spend each month? What are your lifestyle expenses? How much does your business cost to run? Do you have clarity on what your dream life costs? Do you need to opt for financial rescues such as a DWP loan?
These are just some of the questions I ask therapists and business owners when they book a Q&A call with me at Goodman Creatives Usually, the response is, “I have no idea!”
For a comprehensive overview of how to set a marketing budget, check out this video. It’s only 6 minutes long and will give you a great starting point. Or, just keep reading.
Calculate your personal budget to create a marketing budget
Step 1 in setting a marketing budget is understanding how much it currently costs to be you. What predictable expenses do you have every month? Rent, loans, insurance, cell phone bills … for most of us, these numbers are always the same.
Once you have an understanding of your recurring expenses, it’s time to understand life’s variable costs. On average, how much do you spend on food, electricity, gas, etc.
Of course, life is also known to throw us all sorts of curveballs. Fixing a leaky roof. Unexpected medical expenses. A super amazing travel opportunity. To ensure that you can say YES! to all of these without extra stress, an emergency fund is a critical part of any budget.
Get clear on your lifestyle numbers.
Until you have clarity on your current personal expenses, it’s impossible to set a marketing budget for your business.
To start, open up a spreadsheet and your credit card statements and figure out how much it costs just to be you. Here are 15 key areas to focus on …
Housing – rent, mortgage, upkeep, housekeepers …
Utilities – internet, phone, gas, electric …
☔️ Insurance – home, car, medical, business, life …
Transportation – car loans, vehicle upkeep, registration, gas, bus fare …
Food – because organic ain’t cheap, and your body deserves the best.
Emergency funds – for when life gets a little kooky.
Entertainment – how much does it cost for you to have fun?
✈️ Travel – sooner or later, you’re going to actually go somewhere again!
Gifts – if you like giving them, you gotta pay for them!
Clothes and accessories – how much does it cost to keep you styling?
Personal development – coaches, gym memberships, therapy, taking care of YOU …
Recurring memberships – Apps, Netflix, Spotify, everything on your phone …
Taxes – if you are a freelancer or online business owner, make sure to save for Uncle Sam
Retirement – 401k, IRAs, bonds, investments, or whatever other nest egg you’ve got.
General Savings – kids college funds, big home improvements, that shiny thing you really want …
Figure out your business expenses
Once you have your personal numbers figured out, do the same exercise for your business expenses. What bills can you count on each month? How much do you pay employees or contractors? What about rent, utilities, marketing, Google, apps, etc? The list goes on.
Figure out your total monthly business costs, break them down by category, and add everything to your spreadsheet. Then, it’s time to understand the lifetime value of a new client, customer, or sale.
- If you are a therapist, how many average sessions do you have with a client and how much do they pay per session? Multiply those two numbers together and you have the lifetime value of a new client. You can use this information to create a therapist marketing budget. (ok, there’s a lot more than that, but it’s an important part of knowing how much to spend to get more therapy clients.)
- For sales-based businesses, how much total profit do you earn, on average, from each customer? How many “things” do they buy per transaction? How many different purchases do they make? Do people take advantage of your upsell? Be sure to calculate the cost of goods sold when coming up with this number. Though, if you are doing affiliate or network marketing, you are probably looking at a 100% profit.
How much does your dream life cost?
Once you understand what your current expenses are, it’s time to figure out how much you need to actually live the life of your dreams. Close your eyes and imagine the life you WANT to live.
- What does it smell like?
- Is the sun warming up your face?
- Does it smell like pad thai or baguettes?
- Who is with you?
- Bring in all the senses.
- Figure out what car you want.
- Who are you hiring to do the stuff you don’t want to do?
- What additions are you making to your home?
- Google how much that costs and add it all to your spreadsheet.
Now, add in your current expenses and your dream life expenses and get ready to be shocked!
When I did this exercise with my wife, I came up with the magic number of $87,000 … PER MONTH!!!!!
How can you actually finance your dream life and business?
How can you actually finance your dream life and business?There is no one-size-fits-all solution and I don’t claim to have all the answers. Honestly, I’m on this journey just like you! Dreaming of the dream life. Doing everything I can to manifest it.
The one thing I can say with absolute certainty is that your personal brand is at the heart of it all.
