In business, trying to make decisions or plan for the future without a budget should always be avoided. Budgeting ensures that there is never a stone left unturned; that you know exactly what you have available to spend and how it is allocated across your business’ requirements.
If you’re considering methods of marketing your small business, it therefore naturally follows that you’re going to need to create a marketing budget. We’ve talked before as to how you should proceed when you don’t have a marketing budget, but today, we’re going to focus on another aspect of small business marketing budgets— namely, how big they should be.
The impossible-to-answer question
If you were hoping to click on the title of this piece and see a simple, straightforward explanation of exactly what your marketing budget should be, that’s unfortunately impossible. The truth is that there is no absolute, universal answer to the question of how big your marketing budget should be— it’s just too subjective to each business.
While we can’t provide an exact answer that suits all businesses, we can empower you to be able to decide on a figure that is suitable for your business. This is, ultimately, more useful than just telling you how much you should spend. When you know the considerations to take into account, you can continue to calculate your own marketing budgets far into the future, based on the simple lessons we’re going to discuss today. That means you’ll always be able to configure your budget correctly— which is far more useful than a basic figure that would soon be rendered irrelevant by inflation anyway!
So, without further ado, let’s look into how you calculate not just your current marketing budget, but your budgets in the future also.
How much do you have available?
We’ll start with the basics: ascertaining exactly how much you have available to spend.
You will usually have two answers to this question:
- “I have a large amount of money available and just need to know how much of it I should spend on marketing.”
- “I do not have a large amount of money available and I am not sure how I am going to afford a campaign, but I recognize that my business needs one.”
If the first response applies to you, you’re ready to begin setting a budget. We’ll discuss more on this soon, but it’s still worth reading on for ideas to potentially boost your budget further.
If the second response applies, you have a few options to consider:
- You can proceed with whatever you have, which you supplement with your own DIY marketing ideas. This option may not be able to buy you the best possible campaign that covers all the areas you were hoping to cover, but it is within your means, and that’s worth something.
- Alternatively, you can seek to raise funds for a campaign. How you do this is very dependent on the type of business you run. If you’re a retailer, you could have a sale of excess stock; if you’re a construction company owner, you could auction old plant equipment with the help of Equify, LLC and similar companies; if you’re an IT company you could offer a discount package to attract new customers— basically, focus on areas that are suited to your specific business niche.
If you choose the first option, then your best bet is to contact marketing professionals and see what they can offer you for your budget. You may also want to look up some simple marketing tips and tricks for yourself, and especially in areas you may have never dabbled in before. For example, have you made inroads into marketing your business across lesser-known social sites such as Pinterest or Meetup? There’s always something new to explore when it comes to marketing, so even on a shoestring budget, you should be able to make something happen.
If you have raised extra cash by whatever means suits your business, you’re now in the same boat as business owners who have plenty of cash to spend to begin with. That means you can progress to consider…
How big a return do you want?
Essentially, the more you spend, the better return on investment you should see.
If you’re anything like most business owners, you’ll probably think “I want as much as I can get!” and seek to throw your entire available funds at your marketing budget. This is not the right strategy. Here are a few more questions you need to answer to break things down:
- If I were to dedicate all of my available funds to my marketing budget, can my business handle an incredible success rate? — Remember, a successful marketing campaign is going to generate more business. Is your business ready to cope with such an impressive level of growth?
- Is there another area of the business that is also waiting for a cash injection? — A solid marketing budget is incredibly important, but so are other areas of your business. It is not a sensible decision to feather the nest of your marketing budget if that means other areas are having to go without.
You should now be able to whittle down the amount you have available to more realistic terms. After you have set funds aside for other business areas and considered how much extra work you can realistically handle, you should now have a budget you can work with.
“The bigger the better” is not necessarily the right choice for a marketing budget. You have to weigh the funds you have available against the other metrics mentioned above; how much more work you’re able to produce and the requirements of other areas of your company. After considering your existing funds and then adding these mitigating factors, you should be able to create a budget that is genuinely workable, and which enjoys an element of flexibility that ensures your whole company is protected. With this carefully-considered marketing budget behind you, you can look forward to a strong marketing campaign that delivers the results you need.
*This is a contributed post