Marketing Budget Time!
So far, you:
- Outlined your marketing goals and objectives
- Developed your strategies and tactics
- Looked back at this year’s marketing activities and evaluated the results
- And put your findings to work with an action plan.
Now it’s time to set your marketing budget.
Why do you need a marketing budget?
Without a budget many small business owners end up wasting a lot of money on “hit or miss” marketing efforts. Having a marketing budget will help you decide what is important and how your funds should be allocated to have the greatest impact.
How much should you budget for marketing?
Unfortunately there are no easy answers because it depends on your:
- Industry: are you a Business to Business or a Business to Consumer Company?
- Business life cycle: are you a start-up or an established business?
- Marketing objectives: do you want to grow and gain market share or do you want to maintain current awareness and visibility?
The Small Business Administration (SBA) recommends that small businesses with revenue of less than $5 million should allocate 7 to 8 % of revenue to marketing. So, the lowest annual marketing budget for a $2 million company is $140,000 per year, nearly $12,000 a month.
Certain factors may call for exceeding the top end of that range as much as 20 percent (or more). For example:
- Businesses in highly competitive environments such as restaurants and retail stores tend to spend more on marketing.
- Start-up companies need to spend more aggressively than their competitors to attract new customers as they are just getting established in their marketplace.
Keep in mind that marketing budget includes marketing expenses such as: The cost of marketing staff and their overhead, membership and trade show fees, the cost of printing, advertising, and outsourced services.
Use this Annual Marketing Budget Template from SCORE to plan your business’ annual marketing budget.
How do you allocate your resources?
Now that you determined your marketing budget, the next step is to allocate those resources. With all the marketing channels available, you need to be focused and strategic or you’ll just be throwing money at marketing.
Using the End of Year Marketing Check List, you reviewed and evaluated the results of your marketing activities and know what worked and what did not, so my recommendation is to invest:
- 60-70% of your budget on your true and tried marketing tactics that have been always been successful for you and/or your industry
- 20-30% to build up on the new marketing tactics that you tried the previous year that show promises
- 10-20% open for new tactics and opportunities
Marketing drives revenue and is an investment in your small business. Like any investment it takes time to yield results and being consistent is the key in attaining your marketing goals. Having a marketing plan and budget will help you:
- Make better decision on where to spend your marketing resources (time, money and people)
- Stay focused and consistent
- And avoid a “hit or miss” marketing strategy.
As a small business owner finding time for regular and consistent marketing can be difficult because there is always other “business stuff” that takes priority. Consider contacting an experienced marketing professional and partner with them to develop a plan that’s right for you. They can even help you with implementation and staying on track with your plan.