This leads me to the bottoms up approach another valuable tool of projecting, estimating or budgeting. We will use our previous examples from the last post. The first was a new killer product in the mobile phone market and the $5M dollar marketing budget example. A bottoms up approach is starting from the base and building it up to come up with some kind of total based upon everything.

In the example $5M marketing example your boss told you he wanted to spend $2.5M on internet advertising. But where did he come up with that number? He probably thought it sounded good and used it. Your job is to say OK Boss Man, let me show you what this will buy you via text ads, banner ads, site sponsorships, etc. How much per click or per impression, what is the expected # of people who will be influenced, what is the expected # of people who will go to our site and buy something, if those # of people buy something what is the average expected purchase, profit and the bottom line return on the companies $2.5M in marketing. I am no marketing genius I but your job is make sure the boss man know what he is signing up for. The final outcome could be NOTHING like the way you projected it, and it probably will be but the ground work is there for an effective argument to use less funds, more funds or try a different strategy for the marketing bucks.

The bottom line is that you are building something from the bottom to the top. Using the bottoms up approach with the top down approach should yield you some interesting results, hopefully the two numbers are close, if not that's OK but you'll probably need to understand why they are different and explain yourself.