Marketing is essential for helping businesses grow. There are countless marketing strategies a small business can use, and equally countless amounts of money a small business owner can spend. Savvy businesses know where and how to best spend their hard earned dollars. Here are a few things a business might want to consider when setting up their marketing budget.
• Have a true picture of your company’s finances – the specific income and expenses by category. There are an array of accounting software tools to use which can make the numbers easy; I use Quicken Home and Business. Once you have your income and expense listing, I suggest you take the gross sales and then subtract out your fixed expenses (rent, payroll, the cost of inventory). The number that is left is considered your business “disposable income.” Part of the budgeting process would be to determine the expenses that will use up your disposal income and set percentages. Marketing will be a portion of your disposable income.
• Know the average spending on marketing for your industry. You can use this number as a guideline. My industry – bookkeeping and accounting – spends an average of 2-3% of gross sales on marketing. Compare that to a real estate firm which spends and average of 10 – 11% on marketing or a restaurant which spends an average of 7-12%. Whether you are in the fast growing mode or if you are an established firm will also dictate your marketing budget. A simple on-line search will give you clues as to your industry’s average marketing spending.
• Have a marketing plan and set goals. You should know your target audience and know how to reach them. You might, as an example, use on-line marketing if you are trying to reach those aged 15-20 but you may offer a free seminar with lunch included if you are trying to reach senior citizens. You should be focusing on the marketing outlet which will give you the best return for your dollars and time.
• Along those same lines, you would want to put a plan in place to measure the success of your marketing project. I have a simple checklist which lists the marketing events I attend and the business advertising I do, and I chart out the number of responses, the follow up either I or a potential client does, and whether it leads to a sale. When you do this, you have an idea of which campaign might be more or less successful, and you can adjust your dollars to the areas which bring you the most success. A free tool for reviewing your online marketing is Hubspot’s Marketing Grader www.marketing.grader.com
If you are interested in finding small business marketing budget templates, here are two websites that offer free samples. If you are using Microsoft Excel, you can download a template directly from Excel.
Thanks for reading this edition of Financially Fit in Five.