January 25, 2022

Overspending

If you spend more on marketing, you'll likely lose profit in the short-term but you'll increase the top-line both short-term and long-term.

Sometimes, however, your company grossly overspends on marketing. This creates a different set of dynamics. Let's say that I cut back my offline marketing spend by 60% ... a whopping 60%!!


Oh oh.

By year five, you take a business that generated $8,751,000 in sales and $1,908,000 in variable profit ... and you turn it into a business that generates $6,994,000 in sales and $2,039,000 in variable profit.

Over five years, you generate $1,106,000 more in total variable profit by cutting way back on offline marketing spend.

But your business becomes significantly smaller.

These are the traps you face, leading your business.

Run the scenarios.

Know where your business is headed.



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