One of the most overlooked aspects of small business marketing is the creation of a marketing budget. Many small businesses, especially start-ups, approach marketing budgets as “whatever is left over to spend” or they’ll spend in spurts, with no real plan and no way to measure how effective that spend was. While many may feel it’s not necessary, creating a well-thought-out marketing budget is one of the most important things you can do for your small business. So yes, your small business needs a marketing budget.
Most entrepreneurs simply don’t know where to start when it comes to creating a marketing budget but in fact, a marketing budget can be a fairly simple and straightforward. To start, get an idea of what you need, what you can afford, and how your current marketing (if you’re doing any) is performing. Let’s look at each one individually.
What does your business need to get from marketing?
Marketing can accomplish many different things, so identify what you feel is most important. More sales? More leads? Branding? Conversions (which don’t necessarily mean sales…more on this to follow)? Once you know what your business needs, can determine where to spend your money. Some small business owners are looking to expand rapidly and need lots of new sales right away. Others are looking to slowly grow their business, and expand resources as business grows. Looking for quick sales (at least leads) right away? Try paid advertising such as LinkedIn, Facebook ads or Google AdWords pay-per-click model. Looking to grow slowly while you build your brand awareness? Focus on building up your reputation as a subject matter expert through blogging and articles on LinkedIn and even public speaking.
What can you realistically and consistently afford to spend on your marketing?
The fact is, there is no right answer to how much you should spend; only you as a small business know what you can reasonably afford to spend. The goal is to understand what you can realistically AND consistently spend; that will get you the best results. There are varying guidelines on what percentage of your overall business spend should be dedicated to a marketing budget, or how to set a marketing budget that fits your business goals. Start-ups should invest more of their overall spend (but again, keep in mind your needs as well) while more established businesses can commit to a smaller, consistent plan. The key is once you establish that budget, measure it, and readjust as needed. If you can’t measure it, don’t do it. Now, when we talk “consistent” that doesn’t mean you should avoid special events or opportunities that could really boost the company. In general, it’s simply suggested that you are steady with your marketing efforts instead of the shotgun, reactive approach. A marketing strategy can help determine that and keep you on track.
Are your current marketing efforts working?
Are you doing any marketing now? What kind of results are you getting? If those efforts are doing well, you may want to increase the spend for that activity. If there are other efforts that either aren’t performing well, don’t keep investing in those. Go with what’s measurable. As for what “working” means, it can be more traffic, more leads, more sales, branding, or conversions. Conversions, by the way, can be many different things. Did someone fill out a lead form? Download a white paper? Request a free trial? Those are all “conversions” so count all those as “wins” in your marketing approach.
Are you looking at your marketing budget as an investment?
A marketing budget is an investment in your small business; one that should deliver a return. It’s that simple. Every small business needs a marketing budget.
Now you’re ready to create a marketing budget. The key to an effective marketing budget is to establish an initial budget, review results from your marketing spend on a regular basis, and make any changes necessary. Your marketing budget will change year after year (maybe even monthly your first year!), depending on how your business is doing, and what your goals are. Review your revenue monthly, quarterly and annually. Set realistic, consistent spending goals. Measure results.
There are all kinds of marketing budget templates that you can use as a starting point. Choose one that is easy for you and one that you’ll actually use. Even an Excel spreadsheet, broken down by quarter, then by month, and then by line item for different marketing tactics will work. You can also hire someone to create a marketing budget for you. Whatever makes sense for your small business. Just establish a marketing budget!
Your small business needs a marketing budget, so use the details above to get started on one today.