How having a Marketing budget and plan makes sense.

April 28, 2014 in Marketing by Advisory Staff

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Marketing: a cornerstone of good business

Marketing: a cornerstone of good business

Marketing is essential to your profitability and growth. Yet many smaller businesses don’t  allocate enough money to marketing or, worse spend it on plans that are not clearly defined.

We have seen, where small business start a project/plan and either over expect their results, or put an unrealistic expectation on their sales number.

Marketing is the first step in product awareness.  From print media, to Television Commercials, these are all developed to bring product awareness and sets up the sales cycle to take place.

But how much money should you allocate to marketing? And how can you spend it wisely? Here are some tips that can help you do both:

How to Calculate A Marketing Budget

Generally, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing.  This allocation should be split between brand development  (Website, blogs, podcasts, etc.), and  the costs of promoting your business (campaigns, advertising, events, etc.).

This percentage also assumes you have margins in the range of 15-25 percent (after you’ve covered your other expenses, including marketing).

If company margins are lower, then you could consider absorbing more of the costs by lowering your overall margins and allocating additional spending to marketing.  Not an easy call, but your marketing budget should never be based on what’s left over.

Spend the Budget Wisely

Knowing how much you have to spend on marketing is critical; even more critical is how you spend it.
This means having a plan.  Your small business marketing budget should be a component of your marketing plan, outlining the costs of how you are going to achieve your marketing goals within a certain time line.

A great couple of articles are: Does Your Business Have a Marketing Plan?  and How to Cut Your Marketing Budget and Build Your Brand Profitably.

Keep a close eye on your plan.  Make sure you are getting your proper Return on Investment

Once a marketing plan and budget has been developed, remember that it may need to be altered, tweaked to get the most bang for the buck.  There may be times when you need to throw in another unplanned campaign or event.  Knowing whether your spending and initial plan is actually helping you achieve your marketing goals is more important than sticking to your budget.

While you are working on this plan, make sure you have a way to measure your progress.

The one thing to do, is stick with it!  Yes, change the plan if necessary, but not drastically.  Be open to additional avenues that further your plan.  Keep a close on spending and track your ROI.  Starting any marketing plan must have a very clear objective and a little faith.

If you want to learn more:

Contact our Team and talk to one of our Advisor’s.

No pressure, we’d like to get to know you.