On Wed, Oct 3, 2012 at 3:52 PM, Chris Bennett
<..hidden..> wrote:
I would like any advice on how I should deal with my advertising
expense.
We only hand out door flyers for advertising. This works reasonably
well.
The number of hours we spend doing this is determined by how many days
we are not working on any projects.
When there is little work, we spend a lot of time handing out flyers.
When we have a big project or many small ones, we don't hand out any.
Ok.
I have worked out a good system for estimates, but this item has me
stumped on what to do.
I need to charge an amount on each estimate to cover this cost.
But we do some jobs that may only be $400 up to jobs that may run
$10000.
Also, handing out flyers may generate a call today, in weeks, months,
etc.
Right, so you don't know:
1) How much revenue will be generated, and hence
2) How much expense goes into a given project.
This strikes me as a cost and management accounting issue which is currently a little beyond LSMB but a field we'd like to get into.
If I charge a percentage, I may lose money for this cost.
If I charge a fee, the small jobs may cost too much and lose getting it
and I may not get enough from a larger job.
Business advice alert:
My view is that a fee is a bad idea, same with putting anything on the invoice to indicate an actual fee for advertising expenses. I don't know about your customers or your area so feel free to disregard this advice here, but if I were the customer, I would balk at seeing such a line item on the estimate.
I think the typical solution to this problem is to come up with a budget for advertising, assume you will spend it, and try to set your rates to cover.
I had health problems last year, so I don't have a yearly cost to work
with, which might be helpful.
This is a big expense for my company, so I need to get this more or less
right.
There's a budget addon for LSMB 1.3 (rolled into 1.4 core) which allows you to set expected expenses over a period for a project or department, and then track how you are doing against that. This may be helpful.
Also if your business has been dormant for a year, you should expect to spend more with fewer returns at first.
Best Wishes,
Chris Travers