Developing a marketing budget may be the last thing you want to tackle in your business, but it’s important. Your current career status will influence how much you should spend on brand awareness and reach. In general, expect to spend more money when you’re just starting out than when you’re up and running. Wading through dozens of marketing options can be overwhelming, however For any business to be successful, you need to have a marketing budget. And there’s no better time to start thinking about how to invest your marketing dollars.
As a rule, Your marketing budget should be a percentage of your revenue. B2B companies should spend 2 percent to 5 percent of their revenue on marketing. For B2C companies, the amount is often higher – 5% to 10% of their revenue. Below are 10 tips for creating an effective marketing budget, along with common marketing mistakes and how to avoid them.
10 tips for creating an effective marketing budget
These tips cover everything from the planning stage to execution. Creating a marketing budget has never been easier!
1. Planning in advance
Waiting until the start of the new year to create a marketing budget can leave you with a disorganized budget and money wasted on unfocused marketing efforts. You need time to step away from your original marketing ideas to come back to them with a clear head. And when the numbers don’t add up (and they often don’t), you need time to develop new marketing solutions.
2. Start with your sales goals
Setting goals is an important step in building a marketing budget.
- How much do you need to earn every month?
- How many sales do you need to achieve your monthly income?
- How many leads do you need to generate?
- How many of those leads should convert to sales?
Research what percentage of your leads are converting normally. If you’re just starting out, research the typical sales conversion rates in your niche to find a realistic target.
3. Enhance your customer buyer journey
customer The buyer’s journey It’s the series of steps your customer takes to buy your product or service. Charting your buyer’s journey will help you understand your marketing needs:
- How do your customers find you?
- What should they know before buying?
- What are the main factors that contribute to their final decision?
- How do you retain your customers?
- How do you turn your customers into advocates for your brand?
Social proof, videos or Free resourcesKnowing what your customers want during their journey can be eye-opening and inform your marketing plans and budget.
4. List your operating expenses
To create a marketing budget for your small business, you need to know exactly how much money is going out and how much is coming in. Create a spreadsheet with your current or expected operating expenses. Expenses can include staff, inventory, SaaS subscriptions, web hosting, sales tax, professional fees, social media promotion fees, and anything else you need to run your business. These essential business expenses paint a realistic picture of what you need to do with your marketing budget. Creating a monthly marketing budget is important.
5. Review last year’s budget
If you’re already in business, start with the one that’s doing well and the one that lost money last quarter or year. Were there places you went over budget? Were there categories where you didn’t spend a dime? View your current transaction costs. What drives website traffic and sales results? That will let you know where to spend your time and money in a new marketing budget.
6. Understand your niche market
You should look at what your competitors are doing with their marketing efforts. Look at your top three competitors. Use the website spyfu.com to see where they spend money on their site. Are you buying online ads? With thought leadership blogs you are building inbound leads, a Podcastor videos? What methods do you use for advertising? Do you love direct mail over social media ads? Do you invest in any marketing platform or a select few? You may want to Start with the basic strategies your competition is using and see what works for your business. Remember, success leaves clues.
7. Evaluate which marketing efforts are driving revenue
Not all marketing is an expense. When you host a live conference or paid webinar and charge people to attend, you’re promoting your business and earning revenue from that activity. Knowing whether your marketing efforts are bringing in money is a good way to evaluate their impact on your business. It also shows what to keep and what to delete. If none of your marketing activities are generating or driving revenue, it’s time to strategize some new marketing ideas.
8. Prepare or update your marketing plan
Building a marketing plan is the fun part. At this point, you should understand where your business is and where it is going. Use the information above to build your plan.
- How much money do you need to spend to achieve your sales goals?
- What basic marketing tools can you use to get started?
- Do you understand how your customers spend online?
- Do you know how you want to be marketed?
It will be important Prioritize your spending. Focus only on what will make you more competitive sooner rather than later. Don’t start a marketing strategy that you can invest in for at least three to six months. Once the plan is all worked out, setting up a marketing budget for your small business will be easy.
9. Know the difference between a voice marketing strategy and a fad
You can have your heart set on a marketing strategy, but if it’s not supporting your overall business or the numbers aren’t showing up, it’s time to cut it and move on. If the current method that everyone else is using seems like it might work for you, remember that your business is different. What works for one company may not work well for another. Focus on your customer’s needs and develop a unique, hard-to-copy marketing approach.
10. Expect the unexpected
Remember that your marketing budget has many of the same characteristics as your personal budget. No matter how well you plan for every event, something will come up without notice. Leaving a little wiggle room in your marketing budget for unexpected expenses allows you to make the right decisions. Designate a special column for emergencies, so the revolving fund doesn’t get spent unnecessarily on something simple for the office.
5 common marketing mistakes
Now let’s discuss the most common marketing mistakes and how to avoid them when building your marketing budget.
1. Inability to set clear goals
A common mistake small business owners make when creating a marketing budget is not having clear sales goals. You can’t customize for something you didn’t specify in the first place.
2. Not testing your customer’s buyer journey
A broken customer buyer journey can impact your marketing efforts and lead to failure regardless of your marketing budget. Therefore, you should regularly test and make the necessary adjustments.
3. Failure to coordinate marketing strategy and sales
Let’s say you haven’t aligned the marketing budget with sales. If so, you may end up with an ad campaign that has no direct impact on revenue unless it’s strategic to build brand awareness.
4. Focus only on new customers
You may feel a lot of pressure to add new prospects to your company’s buyer journey. However, it will cost you About five times more To acquire a new customer instead of retaining an existing one. Focus on keeping your existing customers happy.
5. Failure to evaluate your marketing strategy
Marketing is an ever expanding and changing field. This requires continuous learning to get the most out of your investment in your marketing efforts. Unless you regularly review your current strategy, you won’t know if your marketing budget is being put to good use. Do a thorough analysis of your marketing efforts. Check out the performance and results. Know your cost per lead and your cost per sale. Also, evaluate whether all marketing tools available to your team are being used effectively.
Creating a marketing budget for your small business doesn’t have to feel overwhelming. But if you persevere and are willing to study the competition, try new methods and track benchmarks, the process will help you build a solid foundation for your business for years to come.
A tight budget shouldn’t stop you either! DIY marketing works too. Start small. Get an overview of your marketing channels; This will make you feel more confident in your marketing efforts. As you learn to set up a marketing budget for your small business, try a thing or two to see what works.
And if you’re not sure how to market your business, take the time to educate yourself! Mine Be your own boss course He devoted several weeks to various aspects of marketing, including branding, planning your marketing approach, and creating your marketing strategy. Meanwhile, if your small business is up and running, you can benefit from the information shared in my tutorial. How to sell and sell online.
As a final tip, I want to remind you that marketing is an ongoing effort. Managing your business and managing your marketing is challenging, but you should spend an hour or two on marketing every day. Marketing is the engine that drives your business results. Focus on it.