So, you have a product to take to market. Great! The question that begs to be asked at this stage is how you intend on marketing that product? What channels do you intend on using? How long will your marketing campaigns run? How much money will you spend?
There are too many businesses out there that have no clue what they’re doing when it comes to marketing. They often waste thousands of dollars before they realize they’ve sunk their budget into a wasteful campaign. Small businesses need to make every penny count, especially when it comes to their marketing budgets.
5 steps to creating a smart marketing budget for a small business
There are many factors to consider when planning out your marketing budget. Approaching your marketing from the wrong angle will only cost you time and money. To help you craft a marketing budget for your small business, here are a few tips to keep you on the right track.
1) Create a marketing strategy
Before you even start thinking about a marketing budget, you need a strategy. Sitting down and creating a marketing strategy allows you to understand where your money will be spent, the length of your campaign(s), and how much money you’ll need to achieve your goals.
Put extra emphasis on your sales channels and target market as you create your marketing strategy. This will help you to paint a clear picture as you plan out your budget.
2) Base your budget on your revenue
Many businesses base their budgets on their actual or projected revenue. Small businesses that follow this strategy typically allocate 3 – 5% of their revenue to their marketing budget. However, a number of factors may change this percentage. These factors can include:
• The capacity of your business
• The length of your campaign
• The industry you’re based in
• The amount of growth your business can handle
Generally speaking, small businesses should invest 7 – 8% of their revenue into marketing, as long as these margins can cover the rest of your marketing expenses.
3) Know what distribution channels you intend to use
Your marketing strategy will typically determine the distribution channels you will use. There are two categories of distribution you need to be aware of – inbound and outbound marketing.
Outbound marketing involves putting yourself in front of your customer. Perfect examples of outbound marketing include live events, billboards, flyers, posters, and TV commercials.
Inbound marketing involves bringing customers to you. Inbound marketing strategies include content marketing, SEO, optimizing your website, and PPC campaigns.
Combine the expenses of your inbound and outbound marketing channels, and determine whether or not you can handle the expense. Even if you haven’t established your marketing budget, you should still be able to recognize what you can and can’t afford. From there, you can more effectively plan out your budget.
4) Set goals
We’ve touched on this briefly, but it’s important to understand the importance of establishing a goal for your marketing strategy. Ultimately, your goals will dictate the size of your marketing budget.
Consider your experience as you’re creating your goals. New businesses, for example, may have to spend more money up front to gain momentum in the market. More experienced businesses may need to reconsider their approach to old marketing campaigns.
Above all else, make sure your goals are attainable, and try to avoid goals that are too broad – the more specific your goals the better.
5) Test, test, test
You’re certainly not going to be a marketing wizard the first time around. You’re probably going to make a few mistakes. You might target the wrong audience, focus on the wrong channel, etc. That’s alright. Great marketing campaigns are often born from repeated failure.
Keep testing and modifying your strategies until you lock down a strategy that works well for your business. Yes, this will cost you money, but the effort will be worth it when you start reaping the fruits of your labor.
Eventually, you’ll develop a great strategy that achieves your goals and puts your marketing budget to effective use.
Getting the most out of your marketing dollars
Once you have a general idea of what your marketing budget will be, focus on fine-tuning your strategy to improve long-term spending. As time goes on, you’ll continue to tweak your strategy until you hit a homerun.
Let One Park Financial help you get your marketing off the ground. Apply today to get lightning fast financing. You’ll be pre-approved in minutes, allowing you to focus on expanding your business through your super charged marketing budget.