If you run a small business, marketing is essential to your profitability and growth. Having a strategy for branding and marketing is also a key part of creating a business plan that leads to sustained growth.
Yet many small businesses don’t allocate enough money to marketing or, worse, don’t have a strategy for spending it. How much money should you allocate to marketing? And how can you spend it wisely? Here are some tips that can help you do both.
Many businesses allocate a percentage of actual or projected gross revenues, usually up to 5 percent for start-up marketing. But the allocation actually depends on several factors: the industry you’re in, the size of your business, and its growth stage. For example, during the early brand-building years, retail businesses spend much more than other businesses on marketing, sometimes up to 20 percent of sales. As a general rule, small businesses should allocate 7 to 8 percent of their revenues to marketing. This budget should be split between brand development costs and the costs of promoting your business advertising campaign, events and other efforts. If your margins are too low for this, then you might consider cutting costs elsewhere and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.
Once you have developed your marketing plan and budget, remember that it shouldn’t be inflexible. There may be times when you need to add in unplanned campaign or event. At the end of the day, knowing whether your spending is actually helping you achieve your marketing goals is the most important aspect of a marketing plan budget. Have a plan in place for measuring your spending and the impact it has on your bottom line. Compare tactics, analyze seasonal effects — was one-quarter more profitable than another?
Above all, have patience and study the results all your marketing efforts have had on your company. It takes planning and perseverance to build and grow a brand.
And remember, if you get overwhelmed, our writers and consultants have decades of combined experience in helping business owners like you create the perfect marketing plan.