How to Set a Marketing Budget
It’s an old saying, but that’s because everyone knows it to be true: You have to spend money to make money. For small businesses, spending on marketing is an important step toward growth rather than a sacrifice.
In terms of setting a marketing budget, a good way to start is by researching how much your competitors spend. If you cannot match their spending, you may want to base the budget on your revenue. We, along with the U.S. Small Business Administration, recommend budgeting 7 to 8 percent of revenue for businesses with revenues less than $5 million.
However, we ultimately think quality is more important than quantity. In other words, effective marketing stems from focusing on “how” you spend your money rather than how much you spend. Dedicate your attention to determining your target audience and developing the most appropriate marketing for that demographic.
After you figure out all of the marketing methods you want to use (social media, direct mail, e-newsletters, etc.), set specific goals for each one. For example, if you’re placing an ad on Facebook, your goal might be to get 100 “likes” in one month. Measurable goals like this are essential in the process of balancing a budget.
Try allotting a significant percentage of your media budget to new things — different ad sizes, publications, etc. This will help you realize what to avoid and what to focus on in future marketing budgets. You need to be able to afford for these experiments to fail. Therefore, your marketing budget should never be based on the amount of money remaining after all of your other business expenses.
Marketing should be considered a top priority — a source of profit rather than an expense. As business management expert Peter Drucker once said, “The business enterprise has two — and only two — basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
If you need assistance in configuring your marketing budget or exploring new channels for outreach, Coles Marketing has the experience and expertise to help.Edit this post
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