Today’s post is the:
conclusion of my 4-part series on marketing a small business on a small budget.
Total AWESOMENESS rating:
five outta five stars, yo. ***** Check and see if I’m right.
Return on your reading investment:
In this post I reveal the secret sauce  I HAD to learn before I was able to generate Five Figures Per Month: Effective Marketing on a Shoestring Budget.

Grow Your Small Business, Starting from ZERO

What’s the heart of any small business? What is the very foundation?

I’ve heard people say:

“a vision”…

“your passion”…

“a dream”… “a goal”… “an exciting journey, providing value for others”…

“fill in the feel-good phrase of your choice here…“

Marketing effectiveness is something you can measure.

News flash: NONE of these answers is correct. Nope, not a one.

The heart of a small business —> is a single business TRANSACTION.

That’s it. Nothing more or less.

You can dream, hope, imagine, visualize whirled peas. But you’re not in business unless you’re selling something. And to do that, it’s very simple:

1. You gotta have, or you have access to, a thing of value.
2. You also need a way to communicate with others that value that thing.
3. You talk/post/pin/make videos about it. They finds out what you gots, then they buys it from ya.

THAT’S IT. That’s what makes a business transaction.

How does a simple business transaction become a bona-fide small business? Simple. Ya make money in a single transaction first. Then you lather, rinse, repeat until it’s a reliable, repeatable, ongoing process. To create a small business, make some money by SELLING SOMETHING… then refine the system afterwards.

First, GET the CASH

So our first step in world domination with our business idea is to make a sale. After making a sale, then we learn to make the next one.

I did this recently with a brand new biz I’m starting on the side. My idea was to start a membership website for people that want or need to train their bodies to do more pushups.

Shout out to Noah Kagan of AppSumo, whose online business course How To Make Your First Dollar inspired the method I used to find out if a “Pushups Product” would even sell in the first place.

So I’ve decided that I’m going to teach people how to increase the number of pushups they can do. That’s my business. Whaddoo I do first?

Get business cards? Naw, need a logo first.

A killer logo will make me money… NOT!

Logo? Well, fine, but the logo should incorporate the web url.

So first I go and reserve a web domain! Right?!?

Wrong again.

The first thing I need to do is make a sale. Or two.  Or three. Or… as many as I can.

Hey, Noah. Lookit this “ghetto”, um, “AD”  I posted to my wall on Facebook:

The ideas is to make SALES.

Can ya believe it? By blatantly copying Noah’s Facebook Validation (validation in AppSumo-speak means market testing) method, I successfully proved that there was a REASON to go forward with the biz cards, the logo, the website.

Besides posting that ad on my front page, I also sent the following text <==to a number of FB pals.

To date, (Oct 2, 2013… 48 hours after beginning the Facebook promo) I have collected $110 in sales. Whoopee!

If NOTHING sold… well that would be awesome too. Because I wouldn’t be knee-deep in biz cards I would never hand out because no one wants my stupid pushup program! If indeed it was a bad idea I would know at this point and save time, energy, money.

But it turns out that folks don’t think my pushups idea was so dumb after all.

Hey! If ya wanna… go take a gander at http://www.howtodo100pushups.com. But open ‘er in a new window, there’s too much great stuff going on right HERE for you to stop now. 😎

So this Bizness is “validated” by making a few sales. We’ ve successfully carried out:

1. Shoestring Step ONE: Get Off Your ASS;
2. Shoestring Step TWO: Find Out Some “W’s” – Who Wants What, Where can we find ’em and hoW;
3. Shoestring Step THREE: Learn to Create Value

Now comes the important Step, the one that takes you from being a little tugboat to an obnoxiously huge steam liner…

Shoestring Step FOUR: Measure Everything You Can.

I know, I know. Marketing metrics. (Yaaaaawwwwnnnn….)

Hey.

YOU.

WAKE the flarm UP!

Metrics CAN be exciting, it you know what you are doing with them.

Because measuring the all the points in your sales funnel is what will make your small business SING.

It puts your finger on the pulse of your small business marketing, shows you where the holes in the bucket are.

(wait… did I just mix some metaphors..? ah, well)

Onward ho.

Effective Marketing on a Shoestring Budget: Your Sales Funnel

Let’s take this party back to the days B.I. (Before Internet). Back to the summer of 1990, when I was just getting serious about turning my two-night-a-week martial arts club into a full-blown, respectable livelihood. We began to develop systems for each part of the process of getting a new Student.

ONE of those systems is reflected in a simple question on our telephone script:

“How did you find out about us?“

There were two forms on the desk by the telephone: one in which we captured all our potential Student’s contact information.

The other form is where we tracked that particular phone call’s source… and where it went after that.

Of all the marketing methods out there at one time, we wanted to know what was generating calls and why. “I got a postcard in the mail.” Check. “I saw your sign from the street.” Check. “I saw your ‘bandit sign’ at such-and-such intersection”. Check. “YELLOW PAGES”. (My son: what’s that, Dad?)

Door hangers and flyers and print ads, oh my! Television, radio. We did it all, we tracked it all.

Then.. divided the number of dollars spent on advertising, by the number of phone calls received. We found that it was around $50 a call.

But by analyzing what medium each lead came from… f’rexample, 3 calls from yellow pages, 8 calls from direct mail… you get the idea…

…we were able to test and tweak. We dropped some forms of advertising and doubled up on others. Wasn’t long before we got to  under $10 per incoming phone call.

Imagine putting forth the exact same (or less) effort, spending the same amount (or less) of money on your marketing… but bringing in twice as much profit. Or three times. Or ten times. That’s truly what is available when you begin to optimize your marketing funnel.

That’s what Step FOUR: Measure Everything You Can is all about.

BUT..!

“Th-th-th-that’s n-n-not all, folks!”

Because THEN, the REAL number-crunching begins.

Because we have an efficient MACHINE of a sales process after folks get caught in our advertising web. And the second form tracks all of that by hand:

• We track the number of phone calls versus appointments set. Was it less than 80% conversion? Tweak the phone script, or get someone better at sales answering the phone.
• We track the number of appointments versus the number of people that actually showed. That inspired us to add, “Do you know where we are located?” and “Call me if you can’t make this appointment, because it’s especially set aside for you” to the phone script.
• We track the number of people that came to the first appointment versus who came back. Less than 90%? WHO gave them their first lesson?
• We track the number of people that showed for a second appointment versus those that enrolled. Less than 80%? Tweak the sales script, or get someone better at closing the customer in there.

And so on.

By KNOWING what the actual numbers are, we can make adjustments whereever weaknesses surface. We plug the leaks in the bucket.

Okay, That’s Nice. So Back to Ta-DAY, Frankenberg!

Yes, everything I’m describing was done by hand back in 1990. But the principle hasn’t gone away… just become easier to do.

We gots Google analytics, adwords, facebook promoted posts, etc. Pay-per-click. Huzzah. You can aim your message RIGHT AT whoever you want… and in days or even MINUTES know what ad copy is converting… track how much it’s costing… and how much you’re making… and pretty soon you have the keys to the kingdom.

Marketing Metrics: Reverse Engineering Your Profits

Here’s a great place to start when you’re reverse engineering: the END.

“Begin with the end in mind”… great advice even when it’s not being said by legendary self-improvement gurus like Stephen Covey. You want to start by focusing on your desired outcome, then working backwards to get clear on each Step it’s going to take to get there.

This is why it’s so important to begin by making at least SOME money. If you don’t have a total runaway winner of a product, something that (practically) sells itself, it’s best to go back to the drawing board and find out the W’s: What People Want (Shoestring Step Two).

But..!

Once an idea is proven with a coupla sales in the bag already… NOW we have something to tweak.

The “World Domination From ZERO Strategy” is basically this: once you know how much time and money it takes to acquire a new customer, adjust your pricing, your sales funnel, or BOTH in such a way that the first transaction totally pays for what it took to find ’em. Then, you continue to serve that customer and it’s all gravy.

Here’s reverse engineering: with all the parts in the funnel working, now take your target income and work back. Say I need to bring up the profit of the studio by $1,000 per month. For the sake of math (I actually charge much more than this) let’s say each Student pays $100 per month tuition.

Hmm. So at $100 a month I need 10 new Students to raise our income by $1,000 a month.

Working back through the sales funnel:

80% of intro program Students enroll. You need 12 intros to get the 10 Students.

80% of appointments set actually come for their intro. You need 15-16 appointments to get the 12 intros.

80% of callers set an appointment. You need 20 callers to get the 16 appointments.

It (started out to be) $50 a call from the advertising we started out using.

20 calls X $50 a call = $1,000 cost to get 10 new Students.

So we find the per-customer acquisition cost is (WAS… it takes a LOT less now) around $100.

Which is cool. Because it gives us a starting point. From there, in addition to our Students’ first month of tuition, we charge  a one-time “enrollment fee” of $100.

Which covers all the costs it takes to acquire that particular Student.

D’ya see where I’m going? 😉

The “World Domination From ZERO Strategy” is basically this: once you know how much time and money it takes to acquire a new customer, adjust your pricing, your sales funnel, or BOTH in such a way that the first transaction totally pays for what it took to find ’em. Then, you continue to serve that customer and it’s all gravy.

By “pricing in” the expense of customer acquisition, we now have at our disposal a killer system. Anytime we want, we can increase the number of Students we are serving at any time we desire and without any net cost.

Meanwhile… as we go, we also do our best to reduce the costs of advertising (again by tracking results) and increase the efficiency of our sales machine (by finding weaknesses and fixing them) even further.

“Small” Business Marketing: TOTAL Niche Domination from ZERO

By the way… In case you think all this tracking is too much a pain in yer keester…

I have never hit five figures monthly profit in ANY biz venture UNTIL taking Step FOUR: Measure Everything You Can.

Just sayin’. 😉

But now, it’s easy for me to scale just about any small biz… to ’bout as big as ya wanna go.

Awright, Steppers! Let’s review these simple “Shoestring Steps” to Total World (okay, NICHE) Domination:

FIRST, you HAVE to start with sales. The heart of the business is the business transaction. It’s easy to be in business when you’re already making money.

For YOUR product, first use whatever means you can to see if anyone really wants it in the first place. And do it on a Shoestring. Spend little or nothing.

See my upcoming posts, ‘How to Validate Your Business Idea Using Craigslist” and “Just Because You Don’t Own It Doesn’t Mean You Can’t Sell It” for ideas on how to test-market for free.

THEN you figure out how your marketing funnel works.

How are people finding out about you?

Are they who you’d thought they would be, or are they coming from different groups than you originally thought?

Where can you find more of them? And how can you best reach them?

NEXT, after you have their attention, how can you get little commitments…

(like an email address)

…that lead to greater commitments…

(like buying your step-by-step guide)

…and finally earn their loyalty?

(they become a rabid repeat customer, an ongoing subscriber, a raving fan!)

FINALLY, you started out with low- or no-cost marketing.  Make it so your NET marketing cost is zero again.

This reduces the friction of growing your business to zero as well.

In the martial arts studio example, I found out exactly how much I needed to spend to acquire a new Student. Then, I took that cost and priced it into each Student’s first month startup package, essentially cancelling that expense!

With marketing costs at “zero”, all I have to do now is work out the schedule to serve whatever number of new Students I desire.

Your mission with YOUR small business is to begin with the end in mind. What income do you need from your small business?

Make some sales first, learning and forming your funnel.

Find out what it costs to acquire a customer, and how much each customer ends up being worth to the company. Then work the steps backward from the finish line to see what you need to do to make your vision a reality.

Attention: This is Yer Call to Action!

Hey Steppers! Thanks for joining me for this series on Effective Marketing on a Shoestring Budget. Hey is there any good reason you should miss a Step with Shoestring101? Subscribe now and I promise to send you only the “bestest ever” content on how to grow your small biz on a Shoestring. Oh, and if you have something to add, a question to pose, or just wanna say, “Hi!” then post in the comments, yo. 😎

Oh, and PETER..?

If you enjoyed THIS post, share it! And here’s a list of other thangs you probably wanna read, or read again:

Effective Marketing on a Shoestring Budget Part ONE  revealing the Shotgun/Laser technique for zeroing in on your target market.
Effective Marketing on a Shoestring Budget Part TWO showed that “demographics” are pretty much old hat, and what has replaced them.
Effective Marketing on a Shoestring Budget Part THREE lists the three most important words in marketing, plus! The Unique Selling Proposition.

In this post, Effective Marketing on a Shoestring Part FOUR, I give up the secret sauce  I HAD to learn before I was able to generate five figures per month.

Before learning sales funnel optimization my marketing was hit or miss. Now I’m able to scale almost any business idea. Marketing effectively on a Shoestring budget depends on Step FOUR: Measure Everything You Can.

On the lighter (but still waaay cool marketing) side, ya might dig

My Take on the 24-Hour Business Challenge “Sumo Jerky”… especially if you wanna see Noah Kagan after his unfortunate incident with those flesh-eating zombies 😉

Zombie Noah. Sorry bro, get better soon.

Okay Steppers! See you in the comments.

Keep Stepping,

Kurt