Advertising for a contractor business can be a tough task. It's hard enough determining which platforms to use for contractor advertising, but if you're a small or new contracting business, you first have to decide how much money you want to spend.
Before you invest your hard-earned dollars into advertising, consider these six questions to determine how much you should spend on bringing in customers:
- What's your monthly overhead?
This refers to the minimum amount of income that you need to cover that expense each month. If you're a one-person business, it might just be your own monthly bills. For larger contracting companies it includes things like payroll, office rent, utilities, and vehicle leasing.
- What's your monthly bandwidth?
This determines how many jobs you can take on per month. It's dependent on just two elements: how many employees you have, and how skilled those employees are. While calculating your bandwidth, think about how long it takes you to finish jobs and how long it might take an apprentice to do the same type of work.
- What's your hourly rate?
Based on your overhead and revenue goals, you probably have at least an idea of what you need to earn per hour to keep your business running successfully. Consider both your ideal hourly rate and the lowest rate you would accept for your work.
- What are your insurance/licensing costs?
No matter what type of work you do, it's likely you have to pay a certain amount of money each month for licensing and insurance. These costs continue even if you don't do any work in a given month, so it's important to consider them as you begin to budget for advertising.
- What are your equipment costs?
Equipment costs can be anything from putting gas in a company vehicle to purchasing new tools to replacing damaged or worn ones. These costs might not be predictable from month to month, but you can look back at yearly totals to come up with a monthly average.
- What's your average customer frequency?
Contractors like plumbers and painters work more frequently than HVAC or drywall installers. However, more frequent jobs are usually lower paying than bigger, less common ones. If you're not sure how often you can expect to do a certain type of work, review your books and calculate how often each customer called you, then multiply by the number of customers you have.
Once you've answered these questions, you have a better sense of your company's financial structure and needs. The U.S. Small Business Administration suggests spending 7-8% of your annual revenues on marketing and advertising, but some companies invest as much as 20% in their early stages.
An alternative to paid advertising
While there's always a cost to doing business, you don't have to pour money into contractor advertising to acquire new customers. Working with a home repair plan company like HomeServe USA helps you to get well-paying jobs consistently, without spending money to join a network or advertise in a directory or publication.
If you’re interested in exploring working with HomeServe USA please fill out our “learn more” form by clicking here or you can speak with a Recruitment Specialist directly by calling 844-876-4709.
