Sep 10 Budgeting is easy if taken step by step

For these articles, I asked Dennis Seid what the topic of the issue is so that I can tie in what I write to the theme of the business journal.  This month’s topic is “personal finance and planning.” And, since school has started since the last issue, I’ll give this an education twist as well.

As a Boy Scout working on my Eagle Scout rank, one of the more difficult required merit badges for me was Personal Management. I was not used to thinking in terms of personal finance and planning. At that point in my life, I had not taken Mrs. Bramlett’s Tupelo High School bookkeeping class and had not yet seen a balance sheet. Then-banker Louis Whitfield patiently counseled me on tracking my income and my expenses. It was a challenge for me to take a weekly account of money I earned and had paid out, but it has paid big dividends for me in the long run. I enjoyed math, so I viewed budgeting as a math problem. I was good at algebra, and that worked for me well.

But, Dennis, let’s call “personal finance and planning” the nasty word we all know it by: budgeting.

Budgeting flows throughout the marketing process. To set a budget for a good or service, there are costs within the four P’s of marketing that have to be considered: fixed and variable costs (price and product), transportation costs (place), and sales, advertising and public relations costs (promotion).

The members of my Agency Management Institute group and I hear this a lot: “I know I need to advertise, but I do not have a budget.”  That does not necessarily mean the person has no money. What the person is really trying to say is “I don’t know how to budget for advertising.”

“What’s the standard percentage of sales your clients use for advertising?” I wish there was a simple formula that worked for everyone, but there isn’t.

There are many variables in determining how to get the message to the customer. It first starts by defining the customer (who). Other things to be taken into consideration is finding the customer (where). There is the action that the customer to take (what). There is the timeliness of the actions that the client wants the customer to take (when). There is the reason that the customer should take this action (why). And, then, there is the packaging and promotion to make all this work (how).

So I’ve just described budgeting in terms of an English or journalism class.

I’ve often described marketing as a science. When I meet with a client for the first time, I ask a lot of questions. I need to know as much about the business as possible. I do background research. Using the information I have collected I come up with a recommendation of how to proceed and share it with the client. The plan is implemented, the data is analyzed and a conclusion is drawn. The client and I then discuss what worked and what didn’t.

Now the science teachers are happy that I’ve included the scientific method. Make no mistake – marketing is a science.

A few clients have a budget and want advice on how to spend their money effectively. Most clients have a comfort zone that they’re willing to spend, but they need to see in what direction it will be spent before they are comfortable moving forward. Using the information that I learn about my client’s business, I can aid in crafting a budget that will get to the client’s customers while using my experience with various media in getting the message to the right people in the right way to have them make the decision to become a customer.

A Scout told me once, “You make this sound so easy.” With a lot of practice comes experience – that’s when it seems easy. Budgeting can seem like a challenge, but taking it piece by piece makes it easier to create and manage.

Originally published on page 15 of the Friday, September 4, 2015, issue of the Northeast Mississippi Business Journal in the Northeast Mississippi Daily Journal.