Small business owners have limited resources, but that doesn’t mean they can’t run a successful marketing campaign. A marketing budget helps you measure the return on investment (ROI) and determine which activities are most effective, ensuring you don’t overspend. It also serves as your guide to staying within a certain limit.
Having a marketing budget also keeps you focused on your marketing goals. With a budget in place, you can prioritize your spending and focus on marketing tactics that are most likely to get results. In addition, you will track how much you’ve spent and where it’s been allocated.
Here’s how to create a smart marketing budget for your business.
1. Determine Your Goals
The first step in creating a marketing budget is determining your campaign’s desired outcomes. Think about what you want to achieve through your marketing efforts and set realistic goals based on those objectives. Some short- and long-term goals include increasing sales or website traffic, gaining new customers, or expanding brand awareness.
For example, if you want to increase sales by 10%, set that as one of your goals and track your progress over time. Setting these goals will help you determine how much money needs to be allocated to reach them.
2. Research and Analyze Your Market
Once you have established your goals and objectives, it’s time to research and analyze your market. Start by researching trends in consumer behavior to get an idea of where people find information about products or services like yours.
For effective analysis, look into industry trends; this will clue you in on which channels are gaining traction (or losing traction) within your industry. You will know whether your competitors are using social media or their websites for their products. Finally, research what other businesses in your space are doing for clues into their marketing tactics and strategies.
3. Estimate Your Costs
Once you have established clear goals and analyzed the market, it’s time to determine how much it will cost to reach them. Research different types of advertising options and figure out how much each will cost to get an idea of how much money you need to allocate for each campaign or tactic.
Include hard costs (tangible expenses associated with a marketing campaign, e.g., materials, printing) and soft costs (e.g., labor) when estimating your costs. This will give you an accurate picture of how much each marketing campaign will cost.
4. Allocate Your Budget
Once you have determined your goals and estimated your budget, it’s time to allocate the funds. Start by creating a spreadsheet that outlines each marketing channel, what tactics you will use for each channel, and how much money you have allocated for each tactic. This will help you keep track of your spending and allow you to adjust it accordingly if needed.
5. Monitor and Adjust
As you implement your marketing efforts, keep an eye on how they perform. Knowing which channels are driving engagement and conversions allows you to focus more heavily on those areas and cut back spending in areas that don’t yield positive results — ensuring that every dollar spent goes towards helping achieve your long-term goals.
How to Calculate the Marketing Budget
For startups, the 70/20/10 budgeting rule may be appropriate. This means allocating 70% of your budget towards brand-building campaigns and initiatives, 20% towards acquisition and sales efforts, and 10% towards testing new marketing strategies or tactics.
Generally, you should set aside between two and 5% of your total revenue on marketing if your business is B2B. On the other hand, if you run a B2C business, you should set aside between five and 10% of total revenue to marketing to reach different customers.
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Takeaway
Creating an effective marketing budget requires careful consideration of both short-term and long-term objectives and strategies. Doing the necessary research, estimating costs, and tracking progress are all essential steps in developing a comprehensive budget. By allocating funds carefully, you can ensure that you are making the most of your marketing budget and achieving desired results.
SwingPointMedia
Local businesses, especially ones that are maybe too small to be managed by a marketing company, often struggle to be found by new customers on the internet. SwingPointMedia recognizes this and has created a podcast for local businesses, sharing strategies and tactics that can be applied to help you grow. In addition, SwingPointMedia offers affordable guidance and coaching to local business owners who want or need to “do it themselves” with a goal to reduce and eliminate wasted time and money chasing the wrong “best strategy” for your business.
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