How to Figure Out Your Small Business's Marketing Budget

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How to Figure Out Your Small Business's Marketing Budget

Alex Rossman • May 20, 2021

How to Figure Out Your Small Business's Marketing Budget

So you have the most brilliant idea in the world but no hint how you're going to get it to the target audience? That's where marketing comes in. One of the most crucial tasks often overlooked is marketing your small business. Many small businesses don't assign enough funds to marketing. Thus, small business owners lack enough experience to come up with a realistic marketing budget. Read on to learn how to effectively develop a reasonable marketing budget for a year or a quarter.

Outline Your Marketing Goals

The first and vital step is to define what you're hoping to achieve with your marketing campaign and how the efforts will boost you to accomplish overall business goals for the quarter or a year. Business goals not only help the growth of the business but also make you stand out from your competitors in all aspects.

Develop a Marketing Strategy

You should come up with a marketing strategy before you create a budget. This makes it easy for you to clearly understand what you require to spend to market the way you desire. You can definitely implement any of the common marketing tactics on impulse, but making informed choices about which to employ is always more effective than trying out random tactics to see which works.

Yes, developing your small business tactic needs in-depth preliminary research. Your research will always ensure your marketing strategy is effective, but that will pay off once you allocate enough funds to marketing your small business.

Base Your Budget on Revenue

The majority of small businesses assign 7-8% of the total revenue to brand development, promotional costs, campaigns, website design, and advertising. The right allocation also depends on various factors, including your business capacity, field of venture, amount of growth you can easily handle, and how fast you need to make an impression. The 7-8% rule assumes that a small business will have revenue margins of 9-11% after expenses, which will also consist of the marketing budget.

You should consider lowering the overall margins and allocating further funds to marketing if your business' margins average below 9%.

Know Your Operational Costs

Now, it's time to dive into the operational costs of marketing and know if you have the means to deliver. Does your internal staff possess the bandwidth required for the marketing task, or will you need an extra headcount? If no, then how much would it cost you to hire an agency to carry out the marketing campaign? This is where you weigh out what is best for your small business and what impact will it bring in the end.

Be sure to estimate quick changes in the marketplace and if you are able to cut down your market share in the face of the current and upcoming competition.

Recognize Current and Future Trends

When developing a small business marketing budget, it's important to have a clear understanding of current and future marketing trends. It's crucial to adopt and apply different marketing technologies to keep up with upcoming industry changes. Every marketing budget should include emerging social media markets and traditional marketing methods.

Ensure you shift your focus on the target audience and what form of communication you are likely to use to reach out to them.

Marketing Channels to Use

When figuring out your small business budget, you should put into consideration what marketing techniques you are deliberating on using. For instance:

● Social Media

● Paid Media

● Search Engine Marketing

● Email Marketing & Automation

● Press & PR

It's important to note that each channel has a different cost and requires a specific amount of allocation. You should carry extensive research on the current pricing and from there you can determine the actual budget to allocate on marketing for the year.

The listed factors will help you come up with a competitive marketing budget for a year or so. Kindly contact us to sign up and get started with your marketing campaign within your budget.

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