Did you know that in 2019, businesses across the United States spent $197.47 billion in marketing?
The most common problem that many small businesses run into is that they haven’t properly budgeted for their ideal marketing strategy.
Figuring out a marketing budget for your business can be tricky, especially if you aren’t sure what marketing platform helps to generate the most revenue for your business.
That’s why we created a complete guide to help you better understand how to create a small business marketing budget that you’ll actually be able to stick to. Keep reading to learn more!
Understand Who Your Customers Are
When you go into developing your marketing budget for your business, the first thing to do is to understand who your customers are and what audience you’re trying to appeal to.
Understanding as much information as you possibly can about your target audience will help you to create a successful marketing budget.
Some things that you should ask yourself when determining your target audience is:
- What is/are the age group(s) of your target audience?
- What is the average income level (average or range) of your target audience?
- What brands do your target audience regularly interact with?
- Where is your target audience located geographically?
- When you have a solid idea of who your target audience is, you’ll be able to build an effective marketing strategy and thus determine your budgetary needs.
Get an Understanding of Your Operational Costs
Before you delve right into creating a marketing budget for your company, you should also have an understanding of what your operational (overhead) costs are.
Something as simple as creating a spreadsheet that has all of the information on what your operational costs are will help you get a much better understanding of what your company can afford to spend on marketing.
Don’t forget to include the fees of your web hosting, professional fees, any content outsourcing fees, any rentals you’re currently paying, and sales tax.
Work on Basing Your Budget Based on Revenue
Once you’ve got an idea of how much it costs for your business to stay up and running, you’ll have a better understanding of how much revenue your company is pulling in monthly and annually.
Many small companies tend to allocate around 5% of their total revenue on marketing.
However, that doesn’t necessarily mean that 5% of your revenue will actually work for your business.
Some things that can impact this are the capacity of your business, the growth that your company can easily handle, how quickly your business is interested in making an impact on your target audience, and the niche that your business operates in.
There are some businesses that spend up to 20% of their revenue in marketing during the first couple of years in operation. It would help if you also kept in mind that your marketing budget will be divided between:
- Running and maintaining a blog
- Running and maintaining a website
- Advertising – online and offline
- Campaigns with influencers
Figuring out exactly what you should be spending on advertising can be tricky, especially if you’ve never been involved with the marketing department of a company before.
You should also be aware that the money that you spend on advertising shouldn’t be what’s ‘leftover’ in the budget after you’ve covered all of the other expenses that your business has.
That said, you should also expect to spend a little more when you’re first getting your marketing foundation set up.
Without the development of a solid marketing foundation, you’ll find that your daily marketing strategy isn’t very effective.
You may even risk wasting a lot of your marketing budget on strategies that aren’t returning your investment.
Decided Where You’re Going to Be Spending Your Money
After you’ve completed the above steps, you should have a better idea of what your company will be able to spend on advertising.
Creating a marketing strategy will help to completely transform your small business in terms of revenue and the total reach your company has!
Some of the different ways that you can market your company include:
- Social media
- Paid advertising
- Traditional advertising
- Content offers
- E-mail marketing
Deciding what platforms will be the most successful for your company based on the behaviors of your target audience will allow you to best allocate your budget towards each of the above-listed channels.
Set Marketing Goals for Your Company
Once you’ve decided on your advertising budget for each of the platforms you’re going to be advertising on, the next step is to set goals for your company.
You can set goals for your small business by asking yourself the following questions:
- How much revenue do you need?
- How many sales does your business need to make in order to consistently meet your company’s revenue goals?
For you to understand whether or not your current marketing strategy is successful, you need to find a way to track your company’s progress and goals.
Understanding the Importance of Developing a Marketing Budget
By having a solid understanding of why your small business needs a marketing budget, you can develop a successful marketing plan that can help speed up your company’s growth process.
Whether your small business is just starting out marketing or you’ve been trying to find a successful marketing budget for a few years, you don’t have to feel overwhelmed.
Plus, a tight marketing budget shouldn’t stop you from finding successful ways to market your business.
Are you looking to learn more about how to develop a successful marketing plan for your small business? Contact Us Today