4 Steps to Creating Your Marketing Budget
& Why You Should Be Proactive, Not Reactive, with Marketing
A blog about budgets? Really, Tangible Strategies? REALLY?
Alright, alright. It’s not the most fun blog topic we’ve ever tackled, per se, but budget doesn’t have to be a four letter word. If marketing budgets lead to more prospects (spoiler alert: they do), and more prospects lead to more revenue, and… do you see where we’re going with this? Increased revenue is pretty great. I don’t know anyone who doesn’t want in on that. So let’s do this…
We talk about how hard it is to run a small business all the time… because it’s true. But it’s not all hard. It’s also so rewarding to offer a product or service you believe in, and to be your own boss! The problem is that just because you’re an expert in your specific field, you’re not necessarily an expert in accounting or marketing, and well, those are kind of necessary to growing a successful business! One big mistake many small business owners make is engaging in reactive marketing instead of proactive marketing. An example of reactive marketing is taking out a Facebook ad because your sales are low one month. Proactive marketing means making your efforts a line item in the budget rather than something you think about when your sales aren’t where you want them to be. To ensure more consistent sales and growth, it takes consistent planning. [Insert cheesy inspirational quote here.]
A good way to make sure that your money is being well spent is to develop a solid marketing plan before you set your marketing budget. Following a plan will help ensure you’re focussing your efforts in the best way possible. We wrote a blog recently on creating a comprehensive marketing plan, so you’ll definitely want to read that if you haven’t already!
If you don’t have time to read that and want a 3000ft view, the basis of your marketing plan should include an understanding of your target market and your competition, how you’ll reach your market, as well as how you’ll set yourself apart from your competition to make sales.
One of the most important facets of your small business marketing plan is—you guessed it—the budget. Your marketing budget is the cost of how you’re going to achieve your marketing goals within a certain timeframe (usually a year).
Many small business owners and managers aren’t sure how much to spend or if the money they do spend will even be worth the investment.
Let’s breakdown the process of how to create a small business marketing budget, so it doesn’t seem as cumbersome or mysterious, and so you can feel confident that your marketing budget will propel you towards your business goals.
1. Start With A Goal
In order to have a great plan or a great budget, you need to know what you’re working towards. So, what do you want? To increase your revenue by 10%? Establish 3 new accounts per month?
Once you have a goal, the next step is to calculate how much money you may need to spend on marketing each month to reach the goal. Whatever it is, it’s going to give you clear direction when deciding on a marketing budget, as well as the KPIs needed to measure your efforts, things like how many customers you’ll need to acquire to hit that goal, or how many leads typically turn into prospects and then customers. (KPIs? It’s all laid out in our Key Performance Indicators Blog.)
2. Figure Out How Clients Find You
One of the best ways to gather user data is through analytics. Most web hosting platforms will provide you with complimentary data, like how many monthly unique views your site gets or which search terms are leading the most traffic to your site. So check with your developer or hosting site to see if you have access to analytics. Online advertising will also provide you with insight into how people are connecting with your ads. Or you could also go straight to the horse’s mouth, aka – just ask your customers!
Include a question like, “How’d you hear about us?” on an interest form for prospective clients, or have your team ask those who call in, or even add a pop-up to your website. Wherever people keep telling you they saw you, focus more money there in the future.
3. Consider Your Revenue
Once you’ve created your fiscal plan, it’s time to determine the size of your marketing budget and allocate your funds. A common practice is allocating a specific percentage of your gross revenue to your marketing costs, but there are also a few other factors to consider when setting your budget (like your growth stage).
As a part of your overall small business strategy, you should always create projections for your yearly sales. These projections will help you decide on a marketing budget that feels doable. According to a recent industry survey, most small businesses spend around 10% of their annual revenue on marketing. However, if you have a new business, you’ll likely need to spend more than a company that’s already established. A bigger budget in the beginning helps build brand awareness and get your name out there!
4. Pick Your Platform(s)
If you’re a business owner, you know you’ve got to have an online marketing presence, but the options can seem endless… between Search Engine Optimization (SEO), social media (a number of platforms), AdWords, and more, the marketing dollars can add up really quickly.
It’s unrealistic for a small business with limited budget to compete in every area, so you’ve got to figure out which one works best for you. It’s so much better to focus your efforts and resources heavily in one or two areas, rather than trying to do it, which most often results in minimal results or success.
So, where do you fit in online? Good question. Well, if you’re a restaurant, you need to be on Yelp, but a Snapchat account isn’t so necessary. Who are your customers? If the majority is older than 40, we’d go with Facebook. If under 35, Instagram is where your customers are most likely to be!
We hope this made you feel LESS overwhelmed and not moreso. ????
Putting together a marketing budget will help you in the long run to stay on track with spending. It will also help you see which efforts have a better ROI, so you can adjust accordingly as your audience changes or grows.
Regardless of where you spend your marketing dollars the main takeaway is to plan for your marketing in advance instead of treating it as a last minute thought.
If this all still seems overwhelming, there are some great online resources that can help to point you in the right direction, like free online marketing budget templates. We’d also love to help answer any questions you have, or help you map out your KPIs and budget for marketing, if you don’t feel like you have the capacity for that!
But the end of the day, you need to know that Ryan Gosling thinks you have what it takes. And we do too.