Setting a Marketing Budget That Fits Your Business Goals
Marketing is essential to the profitability and growth of small businesses. The following tips can help determine how much money should be allocated to marketing and how to spend it wisely:
CALCULATING YOUR MARKETING BUDGET
- Small businesses with revenues less than $5 million and margins in the range of 10-12 percent (after marketing and other expenses), should allocate 7-8 percent to marketing, split between:
- Brand development: website, blogs, sales collateral, etc.
- Business promotion: campaigns, advertising, events, etc.
- If margins are lower than 10-12 percent, consider lowering overall margins and allocate additional spending to marketing. Marketing budgets should not be based on what’s left over once all other business expenses are covered.
SPEND YOUR BUDGET WISELY ON A MARKETING PLAN
- Create an annual marketing plan using research to analyze your competition, customer demographics/behavior, and seasonal/economic conditions.
- Develop proper expenditure allocations and which media outlets you will use. Assess one-time costs, such as website development or printing business cards, in addition to the ongoing costs of placing ads.
REVISIT YOUR PLAN
- Once you develop your marketing plan and budget, remember that you may need to consider another unplanned campaign or event.
- Marketing plans should be maintained on an annual basis, and revisited if you launch a new product/service, or if the market landscape changes.
Creating a marketing plan for your business can help ensure that you’re maximizing each marketing dollar and that your message is reaching your target customers.
Source: SBA (U.S. Small Business Administration), reported by Caron Beesley and Rieva Lesonsky
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