We hear it all the time from small business owners: I just don’t have the budget to do any marketing! However, effectively marketing your business doesn’t have to cost a fortune. Marketing investments - done right - can result in huge returns for your business that are well in excess of the cost.
That’s the point of marketing, right? To make more money!
Small business ownership comes with its ups and downs, surprise costs and economic upheavals. But whether you're a scrappy entrepreneur just starting out or a seasoned pro with years of business experience under your belt, it’s easy to create a marketing budget that works for you throughout these cycles.
Here’s our guide to creating a marketing budget that meets your business goals.
Evaluate Your Budget
How much money do you have to invest in the success of your business?
When you budget out your expenses month to month or quarter to quarter, you should be setting aside an amount for marketing expenses, too.
How much? Well, there’s no hard and fast rule for how much money you should set aside for your marketing efforts. However, some businesses designate a certain percentage of their gross revenue each year to marketing expenses. The Small Business Administration recommends that small businesses invest about 6% to 7% of gross revenue for marketing and advertising.
If your marketing strategy has you spending less than that, consider upping your budget in the future as you gradually become more comfortable with your marketing efforts. Also, be realistic about your goals vs. your budget. If your budget is too slim, then having a lofty goal like “Improve sales of widget X this quarter by 3,000% over last” isn’t realistically achievable.
The amount you spend will depend on your goals, the competitiveness of your industry and who your target market is. So let’s break that down.
Map Out a Marketing Strategy (In 5 Easy Steps!)
What’s a marketing strategy? A marketing strategy is like a business plan that focuses exclusively on your marketing efforts and dollars. It’s your overall game plan - the how, when, where and why.
A marketing strategy is composed of five things: your goals, your target audience, your marketing message, the places your message will appear and how you will measure the success of your strategy.
Step One: Set Your Goals
Let’s start by establishing your overall goals. Your goals should be SMART: specific, measurable, achievable, relevant, and timebound. Creating goals that fulfill these criteria will make it easier to determine where to spend your time and dollars and allow you to track your progress.
An example of this type of goal is, “Drive 10% more qualified traffic from organic search to our company website in Q1 of this year versus Q1 of last year.”
Step Two: Define Your Target Audience
Who is your ideal customer? Generally, 80% of a company’s business comes from just 20% of its customers. Once you define who this 20% is, you can craft more meaningful marketing messages for them - and deliver them at the right time, in the right distribution channel (examples of distribution channels include paid Facebook ad, billboard, Spotify ad, Podcast sponsorship, TV or streaming commercial, etc.).
To uncover the demographics of your target audience you will need to do your research. This could involve calling or emailing your best customers to find out what appeals to them about your product or service. What value have you provided them? How did they first learn about your product or service? Do they have children? Where do they live? What is their general annual income? Favorite streaming services? Do they listen to podcasts? How much time do they spend commuting?
Step Three: Craft Your Marketing Message
So you know your goals and you know who your audience is… now what are you going to say to convince them to take action? Figuring out your overall positioning statement and marketing message can take time, but the good news is that you can constantly refine and adjust it as you learn new information about your audience and get back performance data once you start running marketing campaigns.
If you aren’t sure where to start when creating your messaging, here’s our ESSENTIAL guide to crafting one that moves people to action.
Step Four: Choose Your Distribution Platform
“Distribution platform” is just another way of saying, “How you get your message in front of people.” This could be anything from a billboard or streaming radio ad to a flyer posted up at the local grocery store.
One cost-effective way to reach a specific audience is to advertise online, whether that’s through Facebook or Instagram ads, Google ads, or sponsored content on popular blogs and websites. This is where your market research comes in handy. You will want to identify where your target audience spends most of their time - and ensure that your ads are posted there.
For instance, if you’re advertising to people with long commute times, advertising via billboards or on podcasts or streaming radio services might be a good place to put your messages. If you’re advertising to millennial mothers, a service like Pinterest - which has a high percentage of users in this demographic - may be a better use of your advertising dollars.
Step Five: Measure and Adjust
How will you measure the success of your marketing efforts? Knowing this before you start spending money is key. After all, if you’re not measuring how effective all of your work is, you may as well just be throwing money out the window and hoping something sticks.
A solid marketing strategy will tie those goals to something you can measure through Google Analytics, a unique URL, or a unique, trackable phone number. You can also use a coupon or promotional code that is unique to the type of ad you’re running or the direct mail piece you are sending out. Email marketing will give you a tremendous amount of data as well. You will know if your subject line enticed people to open it, and how many people actually found your offer enticing enough to click through to a website or landing page.
The more you know about how each of your efforts performs, the better equipped you are to adjust aspects of your marketing strategy: your goals, message, platform, or even your audience - based on data; not just “feelings”!
Let’s Create a Marketing Budget!
Now that you have created a solid marketing strategy, we can create a marketing budget!
Go through your marketing strategy and start to identify the costs associated with doing your market research, crafting your marketing message(s) and distributing your message(s) on the platform(s) you’ve chosen.
Social media and email marketing are among the most cost-effective marketing platforms and require only your time and creative effort. They also offer free ways to track and manage how your messages are performing.
If you’re not working with a professional marketing team, there may be a learning curve here as you research the costs and strategies of delivering your message across various platforms. But establishing these costs now will help you plan for the future.
The Future of Your Marketing Budget
Over time, you may also be able to move money from efforts that aren’t working into spending more on tactics that do work. For instance, if ads on LinkedIn aren’t getting engagement but Facebook is taking off, you may want to reduce your LinkedIn ad budget and put it into your Facebook efforts.
Finally, always remember that your marketing budget relies on you having an actual marketing strategy! Without a strategic plan in place, you could overspend or spend money in places that don’t make sense for your product or service.
Strategic Marketing, Remarkable Results
At Marketing Essentials, we’ve worked with hundreds of small business owners just like you to achieve remarkable results. If you’re not seeing the results you want from your current marketing efforts, consider a complimentary marketing consultation.