Marketing is more than a buzzword, it’s the lifeline to a successful business.
You’ve got a great business idea. You’re ready to launch. But wait. Have you developed a plan on how much money to spend on marketing your business? A hard truth to know is that without marketing, your customers can’t find you. It’s time to focus on your marketing budget for your small business. Here are three things to consider with how to create a marketing budget.
How much to spend on marketing?
The first consideration in creating a marketing budget for your small business is the total amount to spend. In general, businesses will typically spend 7-8% (some go up to a maximum of 10%) of their gross revenue to reinvest in their marketing budget. When first building a brand, however, businesses can frequently spend up to 20% on marketing because they need to make themselves visible in a crowded marketplace, there’s a lot of trial and error to find what works, and in general – a lot of opportunity and startup cost associated with building the product/service and marketing to those first initial customers.
Fun fact: Your first customers are the hardest to get, the usually the most expensive to acquire.
The key is knowing the financial health of your business and consistently allocating marketing dollars to attract new revenue. Marketing done right will guide new customers to you, result in increased sales, and gives opportunities to build relationships with your target audience. Acquiring new customers is almost always more expensive than keeping repeat customers. So consider your specific message, target audience, and associated costs when developing your budgets.
Check out the 5 Fundamental of Marketing for Female Owned Small Businesses to learn more about developing a marketing plan to attract the right types of customers.
After you have determined how much you have to spend on marketing (7-8% of revenue), it’s time to think about how to be most effective with those dollars. Important tips on how to receive a high return on investment in marketing include:
- Market research is the first step. Your market research will tell you where your prospective customers shop and how to reach them. Without this information, you’re firing off marketing campaigns and hope something will stick. Find the right target audience and platform to reach them as a foundation of where to spend your money. Go where they are already looking for solutions and spending time online. Go to THEM.
- Consistency is your best marketing secret. When you know where to market and how to market to your audience – the key is repetition. Potential customers have to hear about your business frequently so they can purchase when they’re ready. To learn more, check out Using Frequency Marketing to Gain Happy Customers.
- Tracking sales compared to money spent. You can’t manage what you don’t measure is a time-trusted adage that rings true with marketing as well. Tracking key metrics is vital to your success. Analyze your month, quarter, and year to have a better picture of the impact your campaigns are having. Try ‘A and B’ testing and track the results of different types of efforts. Do more of what is working and don’t be afraid to pull the plug on what isn’t hitting the mark. Your marketing dollars are too important to use them on low payoff items.
- Select the right tools. Successful marketing strategies use the right tools to execute on the details. While some requirements may need tools that have associated costs, many will find that utilizing free tools like Google docs and Wave accounting will be great for planning and tracking progress. Other tools like Monday.com, Sharp Spring, and Improvado have either no or low monthly fees and are worth checking out to help you deliver on the strategy. In the end, the tools you select can be a make or break part of your strategy. Depending on your needs, budgeting for those tools is a key to success.
- Outsource to save time and money. New business owners have to wear multiple hats, but at some point, you must figure out how to get more bang for your buck as the leader of your small business. Outsourcing is a great option to give you more time, a new perspective, and how to ultimately reach your market. Here’s 5 Reasons for Outsourcing Marketing Activities vs In-House Hiring.
What should be included in your marketing budget for your small business?
There is no doubt that having marketing is essential for success. To stick to your budget, whether it’s 7% or 10% of gross revenues, it’s critical to know what should be included. To learn more, check out 3 Key Elements in Every Successful Marketing Plan.
Here are some common things and ideas for you to consider when planning your marketing budget:
- Website design (usually a 1-time, up front cost)
- Website management (ongoing cost)
- Branding (packaging, inventory, etc… if applicable) (usually an upfront cost)
- SEO (search engine optimization, ongoing cost)
- Content (email marketing, podcast production, webinars, etc – typically an ongoing cost)
- Advertising (ongoing cost)
- Social media (ongoing cost)
- Public relations (ongoing cost)
- Events (ongoing cost)
- Tracking tools (ongoing cost)
- Marketing automation (ongoing cost)
- Outsourcing (ongoing cost)
Important Key Takeaway
The key here is to select the activities that will yield the highest results as soon as possible. A lot of small businesses make the mistake of burning their cashflow too fast, and too soon, and before you know it – they’re out of money and options. It’s much better to pick less items to include iny our marketing budget, but make those items count as much as possible.
Now, with your new plan on how to create a marketing budget, you’re ready to dive in and give your customers what they want. Building a successful woman owned business has multiple layers. At Sohuis, we’re ready to be your secret weapon to learn the ropes on building a business. Come check out our member fireside chats and masterclasses from exclusive marketing consultants to how to do PR on a budget. Come check us out and see how we can be your best resource!
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