Let’s face it – budgets are not fun or exciting. And if we’re going to be honest, many small businesses might look at this exercise as a dreaded annual task. To simplify the process each year, it’s easy to just make a tweak here or there from the prior year’s figures or a percentage point up or down in this column or that one. Marketing can get overlooked and undervalued with a carryover-from-last-year attitude. Don’t fall into this lethargy. Start now with a plan for next year’s budget and make sure Marketing is a line item, not lumped into something else like Sales and not buried in Other.
To help you jump-start your planning, here are guides for the three most frequently asked questions we hear about marketing budgets.
- How much should we spend?
- In what areas should we spend it?
- Can we save money and do it ourselves?
This depends on many factors, such as the industry, your prominence in the field, the number of years in business, your competition and more. A large established company, for example, might budget 1-2% of their revenue on marketing, while a small start-up venture might need to spend 20% for a couple of years.
Small businesses may not have the luxury to afford traditional advertising, so spending needs to be strategic and measurable, not all over the place. That said, if something isn’t working after a reasonable amount of time (not a month here or there) then it’s perfectly fine to go in a different direction. The Small Business Administration (SBA) recommends this for how much and where:
As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business(campaigns, advertising, events, etc.).
A small business may not have an in-house marketing specialist or the means to hire dedicated staff. Although specialized marketing is best left to professionals – perhaps an hourly outside consultant – there are lots of things you can do yourself. Learn WordPress and do your own website. Set up a blog and promote yourself as an expert. Put aside time each day to tweet.
Ramon Ray, a small business evangelist, stopped by The Marketing Mojo Show and here’s what he had to say about marketing budgets.
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How much do you budget for marketing?
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