Creating a marketing budget for your small business is essential for achieving your marketing goals. Ready to create a budget for your small business? Here are the steps to create a marketing budget for your small business that will work for you.
Determine Your Marketing Goals
Define your marketing objectives. What do you want to achieve with your marketing efforts? Common goals include increasing brand awareness, driving website traffic, generating leads, boosting sales, or launching a new product. Every small business is different, so deciding which goals work for you will depend on your business. Not sure which ones to choose or feel that they all apply? Try to prioritize and use that as an initial measurement of your marketing success. You can always go back and add additional goals, but this way, choosing a single goal helps keep the initial measurement manageable. Here’s a good article that may also be helpful in choosing your initial goal.
Establish Your Incoming Revenue and Outgoing Expenses
Calculate your expected revenue for the upcoming year. Consider historical data, market trends, and growth projections. Next, identify your fixed and variable expenses, including rent, utilities, salaries, and other operational costs. If you’re a new company, this will likely be an educated guess. That’s OK; just start with some idea of anticipated revenue and expenses; you can always adjust these later as you have a more solid idea of incoming and outgoing monies.
Choose a Percentage of Revenue to Dedicate to Marketing
A common method for setting a marketing budget is to allocate a percentage of your projected revenue to marketing expenses. The percentage varies by industry and business size but typically falls between 5% and 15% of revenue. Smaller businesses may need to allocate a higher percentage to marketing initially to build their brand and customer base. It also may depend on whether you’re a B2B or B2C company. We found this article by BDC to be insightful in determining a percentage of revenue for a budget.
Research Industry Benchmarks to Help Guide You
We get it: some of the tasks we’ve listed above may seem challenging if you really have no idea, such as a startup company. Relax! Budgets aren’t inflexible and should adjust over time. Checking out your competitors can help give you a place to start. Research industry benchmarks and competitors’ marketing spending to see how your budget compares. This can help you determine if your budget is too high or too low relative to your industry standards.
Prioritize Which Marketing Channels You’ll Use
Identify the marketing channels that will best help you reach your target audience and achieve your goals. Common marketing channels include digital advertising, content marketing, social media, email marketing, SEO, and traditional advertising like print and radio. Even within those buckets, not every platform will make sense. Social media is a good place to really hone in on what audience you’re trying to reach so decide which channels you want a presence on, and which of those channels are best to advertise on. Allocate budget based on the effectiveness and ROI of each channel for your business. Again, if you’re unsure, start with a minimal number of platforms so you’re able to effectively measure results.
Create a Budget for Each Marketing Channel
The best way to measure results is to look at spend vs. results. Break down the budget allocation for each marketing channel to best achieve this. Consider expenses such as advertising costs, marketing software and tools, content creation, graphic design, and any small business marketing consultant or freelancer fees if you’re outsourcing certain tasks.
Plan for Campaigns and Other Initiatives
If you have specific marketing campaigns or initiatives planned for the year, allocate the budget accordingly. Ensure you have a line item for each campaign, including costs for design, promotion, and any associated events or giveaways. If you have products or services that are seasonal, you may want to consider creating an editorial calendar by quarter, month, holidays, etc. From there, you can have a good overview of what you’re focusing on when, and which take priority.
Monitor and Adjust as Needed
As we mentioned before, your marketing budget is not set in stone. Regularly evaluating your marketing performance and adjusting your marketing budget for your small business is important. If a particular channel or campaign is delivering strong results, consider allocating more budget to it. On the other hand, if a channel is underperforming, reallocate funds to more effective strategies. Especially if you’re a startup, evaluating throughout the year makes sense. Being aware of your spending and the results you’re getting is important, so don’t be afraid to adjust as needed if you have enough data to support your actions.
Plan for the Unexpected
No one plans for a recession, a major client leaving, a pandemic, or whatever else life throws your way. Leave some room in your budget for unexpected expenses or opportunities that may arise throughout the year. Having a contingency fund can help you adapt to changes in the market or unexpected marketing needs.
Creating a marketing budget is a dynamic process. As your business grows and market conditions change, your budget will need to adapt to stay effective. Regularly review and adjust your budget to ensure you’re making the most of your marketing dollars. If you feel overwhelmed by establishing an initial budget, working with a company like Strategic Marketing Services can help. Whether you do it yourself or work with someone to help create a marketing budget for your small business, the time to get started is now!
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