How to Develop a Marketing Budget for Small Businesses

By Monique Craig | 19 May 2014

One of the biggest unknowns for many first-time business owners is figuring out a required budget allocation to go towards marketing activities. But it’s far from being insurmountable, writes Monique Craig.

When it comes to small company marketing strategies, there are basically two ways to go: you can either reach your customers through paid advertisements and other forms of marketing communication, or you can resort to personal contacts. Whichever strategy you opt for, one thing is certain – you’ll need a well-structured and efficient marketing budget plan.

The goal is to build your budget, stick to it and manage it well, all the while remembering that the money allocated in marketing is nothing short of an important business investment. Cutting back on marketing might have more serious consequences than you think – for small businesses, the reduction of funds allocated in marketing leads to sales decline, which in turn influence the future amount of money you’ll have available for marketing.

When planning your budget, think ahead and consider its long-term performance – after all, good marketing is not only about attracting the customers, but also keeping them.

How Much Should You Spend for Marketing?

Just a decade ago, a company’s marketing success was based on the amount of money this business could invest in paid advertisements and marketing campaigns to make their brand stand out on the market. In today’s digital age, marketing strategies have radically changed – communication and maintaining interaction with customers can be achieved with minimum funding through social media channels.

In general, it’s best to start with 10 percent of your revenue – especially if you’re not sure whether your business will benefit from a specialised and targeted marketing campaign. This goes for both online and offline businesses – most marketing gurus point to 10 percent as a minimum margin to make the investment effective.

Come Up with a Plan

After you decide on your budget, it’s time to make your budget plan. Some of the essential elements of any successful marketing budget plan are:

  • An analysis of your market and your competitors
  • An overview of the products provided by your company
  • The chances and risks of the industry
  • Definition of your target market
  • Crystallisation of your goals and objectives
  • A detailed timeline for each marketing strategy

A good marketing budget plan relies on a thorough research of the target demographic – learn how people access information, which channels are most effective to reach them, or the ways in which social media and websites explore your industry. You can use online tools like SurveyMonkey to conduct surveys and ask your potential customers about their habits and preferences.

Build Your Budget

Once you know what you’re facing, you can proceed to build your budget. It’s best to create a special spreadsheet that will include information on each and every of your marketing tools, with their cost for a quarter of a fiscal year. Feature all the marketing channels you plan to use, from print media and promotional items to press release distribution, flyers or social media campaigns.

To make your life easier, there are plenty of online tools not only to conduct customer research, but also to build your marketing budget with practical templates. Some of the best free marketing budget templates are:

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