For a small business, it is paramount that marketing is essential to your profitability and growth.
How do you determine how much to spend on marketing?
If you choose to ignore spending money on marketing at your own peril!
Your marketing budget should not be based on what’s arbitrary or token after though depending on the expenditure of your other business expenses, but a carefully thought out plan.
Marketing should be seen as a top line item needed to drive new sales revenue and growth. The marketing budget should be evaluated against potential revenue it may generate and the effort required to create that revenue. The marketing spends you ultimately budget for in your business is a preference of the business owner and what potential life cycle your product may be at.
Somewhere between 5% to 12% of revenue is a healthy budget to work towards.
Your marketing budget should be determined by your product offering and what will generate awareness of your company. As your company grows in size, marketing priorities start to shift away from brand awareness to other aspects of your product lifestyle Take a moment also to review your competition and look at industry trends. How much are your competitors spending, where are they spending their marketing dollars and why? How competitive is your business within its market, and what share of brand awareness do you have?
Okay let’s get down to specific steps
Step one – determine how much you are going to allocate as a budget!
Step two – review what events and needs are required to spend the money.
E.g., new product launch
– Calendar of events that may generate sales
– Local drive to customers buying habits
As an example, a small business as a florist may see Valentine’s Day and Mother’s day as a prime time to advertise
A butcher may see summer as a great time to promote their sausages and steak when people are having BBQs.
Step Three – which medium do you spend and when
Now, with the advent of social media Facebook, Instagram and other type programs are far more effective than yellow pages and newspapers. Don’t forget to consider other mediums as local sponsorship. Check out what gives you the best bang for your buck!
Finally, once you have done that Review what works. Look at last year’s spend and see if it gave you results. Some results are measurable others less visible. Asking customers listening to the phone ringing is a sure way to find out if your efforts are hitting the target. Try something and if it doesn’t work then move on to a different approach,
Doing nothing is not an option and best of luck for 2019 and growing your revenue and business.
Check out our video here summarising this article