A number of local (and even international) businesses can’t connect the dots between marketing dollars and sales. That’s important to know, whether or not you’re making money, and how much. If you can’t measure your outputs (probably some form of sales) then you can’t figure out a) whether you’re making money, b) more importantly, WHY and HOW.

The why is crucial because is stretches backwards and says, “this is why you’re making money.” It may highlight particularly effective market segments, or it may point to new opportunities.

The how is also crucial because it says, “how are we making money or how are we failing?”

If you have good analytical tools and can answer the question of ‘why’ and ‘how’ then you’ll get a picture of why you’re winning, or more importantly, why you’re not. (Powerful free tools exist, Google Analytics being one.) Effective planning and measuring of your business will give you the capability to adjust and fix what’s not working.

If you can’t determine what’s wrong and what particular segments of your business are underperforming, then you’re throwing money out the window.

In our particular business segment, web marketing, we see too many small business owners blindly putting money into promises and strategies that provide little return. They have a hunch things aren’t working but they can’t probe it. Although the scales are tipping, the businesses still ‘investing’ literally thousands of dollars a month into the likes of YellowPages or even Adwords, are doing so with little return. (The former being truly ineffective, the latter effective if you’re doing it right.)

Ask questions like, “do I know how much revenue I’m getting from my advertising?”

If the answer is no, then it’s time to go back to the drawing board and start measuring the ‘how’ and the ‘why’.