A small business marketing budget For small business owners, it is important to have a strong plan. Of course, being able to adapt on the fly is important, but no business cannot succeed without planning ahead, and this includes budgeting. Small business budgets can be tricky as you may have a small number of employees working in multiple departments.
Of course, every business is different. Depending on your company’s audience, products, or other details, your marketing budget can vary significantly from that of other
A small business marketing budget, even in the same industry
For example, if a company’s primary customer demographic is older consumers, it would be wasteful to spend a lot of money on social media campaigns. You might be better off focusing on email marketing or direct mail campaigns. But that doesn’t mean you want to completely ignore social media. As you can see from this article, marketing is a complex task that involves many moving parts that work together.
Marketing strategists who are most effective are holistic in their approach
Identifying and targeting demographics exclusively is not the answer, nor is it a one-size-fits-all proposition. Marketing budgets can vary widely from business to business, depending on the size of your company, the industry in which it operates, future business goals and objectives, and other considerations.
Even with the myriad factors to consider, it is still important to draft a solid budget for marketing your small business. Having a plan will help you spend your company’s money efficiently and effectively.
Here are some things to keep in mind that will help you plan your course for a small business budget.
A small business marketing budget Consider overhead costs
One of the most important things to keep in mind when building a small business budget is the cost of running your business. There are various costs to consider.
If your business sells physical products, how much does it cost to create a single unit of each product?
How much does it cost to ship a product to a customer?
How much does it cost to rent company office space and how much does it cost to keep the building up and running?
What is the overall salary cost including employee benefits?
These are just a few of the various costs of running a business, but you need to track them to form an accurate budget. While calculating overhead, you may also find potential ways to save money or cut expenses.
Of course, the cost doesn’t just mean the amount actually spent. You can also think of it as a general use of a resource. When thinking about your company’s marketing initiatives, it’s important to focus on all the resources you need. Do your people or employees have the ability to do the marketing work you need to do? Is it better to outsource this work to a 3rd party agency? Can your business afford such an institution? It is also important to consider the opportunity cost of not implementing a given marketing initiative. When weighing the pros and cons, cost and potential benefits matter to any budget, and marketing is no different.
Use of available data
Today’s business world has a repository of data at your fingertips. It’s easier than ever to keep track of:
cost per acquisition
and more metrics
This is an important data point to consider when building a marketing budget. You may find that some areas of your marketing efforts are already more effective than others. For example, if your business is generating a significant amount of leads, but you aren’t seeing the desired amount of conversions, you should focus on converting those leads into revenue.
Conversely, if you have a high conversion rate but are struggling to get leads, then lead generation is a good place to spend your money. It’s also important to understand the math behind each sale or acquisition. What is the average value or revenue generated per lead and what is the average cost of those leads? Knowing the data behind your sales funnel is critical to knowing where to spend your marketing budget.
Before deciding where to focus your marketing efforts, it’s a good idea to consider your company’s overall goals and objectives. Do you want to increase your revenue? Or do you want to increase your brand exposure? To create an effective budget, it is important to understand the practical goals of your business.
If your goal has more to do with generating active users than revenue, your marketing budget can best focus on promotional campaigns that entice potential customers with free content or affordable services. Or maybe your business is in its early stages of development and you want to use your marketing resources to find out who your prospects are. Of course, if you already know your target demographics, marketing can help you focus your attention more precisely on those consumers. However, one potential pitfall is that you spend too much on targeting a limited audience.
Know your company’s current location
Are you at a stage where rapid growth and sales are the most important metrics? Or are you closer to the planning stage looking for slow, steady revenue growth instead of dramatic spikes? Knowing where your company is at will help you focus more on your marketing budget, so you don’t allocate resources to areas that ultimately don’t serve your current situation. For example, if you’re in the growth phase, it might be wise to allocate a significant portion of your marketing budget to internal development, such as improving your website. However, if you’re in a more stable stage, it’s worth investing in some branding effort that is longer term and can pay dividends over time.
Depending on what stage your company is in, the most effective marketing may focus on one of three different forms of media: owned media, paid media, and acquired media. Owned media refers to properties over which a business can control itself. This includes company websites, email newsletters, blogs run by the company, and social media channels. For tighter marketing budgets, improving your own media can be a relatively cost-effective starting point.
Assuming your company has an in-house team to run its own media improvements, the only cost might be personnel. Otherwise, if a business intends to use a third-party institution for these tasks, it will need capital to fund the initiative. However, for businesses that are just starting out or are looking for an affordable way to boost their marketing, their own media can be a good starting point.
On the other hand, paid media can be a vehicle to pursue a fast-growing company. For businesses interested in generating revenue as quickly as possible, paid media can provide an advantageous opportunity. Paid media refers to:
Paid Social Media Ads
This type of marketing can be of great help to businesses looking for rapid growth. It also provides easy short-term tracking. It’s easier to evaluate and downplay these efforts if you’re not seeing the desired revenue from paid media. This is in contrast to acquisition media, which is a long game where the rewards may not be clear.
Acquisition media refers to organic actions such as sharing, reposting, mentioning, etc. These types of marketing milestones can be difficult to achieve and usually take longer to generate unless you are lucky enough to get something going. Targeting acquisition media can be a good strategy for businesses that aren’t currently looking to increase revenue, but it can be a waste of money if your business is looking for rapid growth.
Keep an eye on industry trends
It’s important to sit down to anticipate the marketing trends in your industry and create a marketing budget that you plan to plan for. For example, social media marketing is a much different area now than it was a few years ago. There are many industries where social media marketing is a major focus, but this may not apply to your particular business.
Email marketing may be a good way to spend your marketing budget, depending on your customers. You may also want to consider SEO and blog-based content if you run primarily an online business or your customers are unfamiliar with your brand. And there are many more “traditional” ways to spend on marketing like radio or television.
In certain industries, radio is a very viable place for effective advertising. When considering how to plan your marketing budget, you should never put a stone on it. The last thing you want is to realize that you could or should have spent some time or resources on the path you neglected to pursue.
The most important thing to keep in mind as you begin planning your company’s
next marketing budget is that marketing should be considered not only as an investment, but as a holistic process. All too often, businesses view marketing simply as an expense and look for ways to cut costs or cut costs. A better way to think of marketing is a long-term investment that can pay a necessary but big dividend. And again, it’s not as simple as choosing one path and putting a lot of time or resources into it.
For example, email marketing may be one of the most effective tools for your business, but that doesn’t mean you have to give up social media entirely for email. In a successful business, your marketing efforts all work together to strengthen your brand, generate leads, and generate revenue. It’s never been as easy as turning the switch on and watching your clicks, likes and purchases come in. That’s why having a detailed roadmap in the form of a marketing budget is a must for any small business at any stage.
Luke Lofting is a blog writer and award-winning indie filmmaker. When not writing about himself, he specializes in finance and health and blogs on all kinds of topics including credit cards, personal loans, bank accounts, and digestive systems. He currently writes for Leads Market, among other sites, and his articles are scattered throughout the information highway.