How Should you Allocate your Marketing Spend?
Overview
Quickbooks Pro Advisor, Taylor Bridges, encourages Farms to use marketing tools to help their brand succeed within their community. She says marketing can be a useful tool for your Farm business to expand your reach, and offers several tax advantages. Tangible and intangible Farm Marketing efforts, can both be written off as an operating expense (lowering your taxable Farm income). Learn how successful Farms invest in a variety of marketing tactics, and use them as a tax write-off to save money:
Why Should Farms Put Money Towards Marketing?
As an independent business, you must attract Buyers to build your brand and grow a sustainable operation. If you are unable to maintain a loyal base of customers, you will not make enough profit to continue running your business long-term (you’ll just lose more money!). Marketing efforts can help you better engage your current customers and foster loyalty, while attracting new Buyers to your business, online and in-person. You must evaluate your return on investment from various marketing platforms to determine which tactics are worth your efforts and spend.
On average, it takes 5 to 7 impressions for people to remember your brand. If you are simply relying on sporadic visits from community members to a Farmers’ Market, you will miss out on future, ongoing purchases. Marketing is crucial to keep your Farm brand top-of-mind for customers and to encourage repeat purchases (Note: no one is going to stop eating!). As an independent Farmer, your time is already taken up by Farm chores, your daily routine, family commitments, and growing and harvesting your products (to be purchased). You do not have time to add hours of marketing efforts to each day. This is why it is crucial to allocate budget dollars to simplify your Farm marketing, so tasks can be streamlined and automated, saving you time while attracting more customers (and growing revenues).
Just as your Farm spends money on equipment or labor, marketing is a worthwhile expense for the betterment, and sustainability, of your business (and finances). Taylor Bridges shares, “Marketing is an operating expense on the books, and that means that it's going to be deducted from the business's taxable income, potentially saving the farmer money on the taxes that they owe at the end of the year.” Find where you wish to budget for marketing, then accurately report on your expenses to use as a tax write-off.
Which Marketing Efforts are Considered a Tax Write-off?
Marketing efforts can occur online or in-person (tangible or intangible). Most successful Farms have a mix of both types of assets, while some may lean heavily into one type. Taylor explains that “since marketing can be considered an operating expense, that isn't counted towards taxable income.” This means that no matter the avenue you choose to market your Farm to potential customers, you can report it as an operational expense, since it is part of your day-to-day Farm business operations.
Intangible Farm Marketing Assets
Digital marketing assets are a must-have tool that should be leveraged by every Farmer, as we live in a digital age where people are used to the convenience of ordering food and other products online (smartphone, computer or tablet). To begin with, you must have a consistent Farm Brand presence across all online channels (website, social media, newsletters and mobile). All Buyers, existing and prospective, should be able to discover your Farm business and place an order online, without any efforts on your behalf.
Additionally, consider how you can get in front of new Buyers, using Ads to target local searches for your products (and focusing on local key words). Social media ads, too, can appear in front of potential local Buyers as part of their feed or in stories to attract them to your profile.
Successful Farms use software to automate and streamline their digital marketing efforts. Using an email platform, such as Mailchimp, to help target and segment your Buyers into lists, create specific communications and scheduled emails to save you time each month. Instead of having to write out and send individual emails, Mailchimp + Barn2Door provides a system to streamline the process of engaging New, Loyal and Laggard Buyers. This is important, because Farms that send regular newsletters to their contact lists enjoy +28% more in average monthly orders.
Barn2Door offers a monthly Marketing Toolkit featuring prompts and graphics to use for social media and email marketing. This asset gives Farms back hours each week which would be spent crafting posts and newsletters, and instead giving them customizable tools to send to Buyers. For only a few dollars a month), your Farm can receive marketing assets that will help promote your products, engage Buyers and attract new customers. (Note, a Barn2Door Software Subscription and the Barn2Door Marketing Toolkit are both tax deductible marketing expenses against Farm Gross Income).
You may also consider paying partners to redirect to your online platforms (such as other local businesses or Farms you may work with), to gain followers from their page. Local influencers in your community can promote your products to their customers, and/or offer incentives to attract potential Buyers (e.g. special local business promo). Your Farm can also employ a social media marketer to take the stress off of you as the Farmer, and their payments can be written off each year as a business expense.
Tangible Farm Marketing Assets
Physical marketing assets may include anything you use for in-person marketing, featuring your Farm Logo and Brand, including banners, your trailer, or even a Farmers’ Market booth. Consider everything you use for in-person sales that may be branded to attract customers. You may also create assets such as business cards, stickers or magnets to add into orders online and in-person. Many Farms give products away in branded tote bags, so customers are constantly reminded of their brand. Take note of these items and report on them each year as a tax write-off to save money.
How Should Farms Budget for Marketing Expenses?
According to Taylor, most Farmers fail to adequately budget for Farm Marketing expenses. While most small businesses allocate 10-15% per annum of their Gross Income to Marketing, most Farmers set aside far less (or none at all). Every Farm is different. Taylor advises against a shotgun approach when it comes to putting money towards your marketing efforts. It is best to start small with your Marketing efforts and diversify your investments (online and in-person) to find what works best for your Farm and potential Buyers.
Start first with building a consistent Farm Brand presence - online and in-person. Then, be intentional with Advertising spend - measuring the returns on investments. You do not want to throw all of your money into Facebook Ads if the majority of your Buyers are more receptive to flyers at a market.
Build your Brand presence where your local Buyers frequent most often, whether that’s online in Facebook groups or on Instagram, in-person at certain markets or other business, or a mix of both. Once you find potential Buyers, you can focus your marketing efforts to ensure you are driving a return on your investment. Work with your Accountant and/or Tax Advisor to ensure you accurately capture and report your expenses, and save money in areas that can be recognized as a tax write-off.
Conclusion
It is crucial to invest Farm Marketing efforts - online and in-person -to attract customers and capture ongoing sales. You cannot simply expect Buyers to flock to your products, especially when there are more convenient options available at the local grocer. Buyers want to feel connected and loyal to your brand, so share your Farm story, products and offer convenience through marketing efforts. Allocate money towards your Farm Marketing, and then accurately capture and report these costs to save money during tax season.
Barn2Door offers software for Independent Farmers to create and promote their brand, sell online and in-person, and save time managing their business. If you’re curious to learn more, watch this 5-minute video.