Budgeting – one of the most difficult (and important) pieces of running a small business. While the importance of budgeting is not lost on small business owners, it is still a challenge to feel comfortable creating one for your marketing. Many businesses don’t feel comfortable setting aside a set amount of money for marketing – or they prefer to decide on a whim to run an ad.
However, a marketing budget will help you grow your business and is an important part of your marketing plan. It will help you not only keep your spending in check so you are not over OR under spending- but also make it easier for you to track and analyze the success of your marketing. It will also allow you to easily be consistent throughout the year in your marketing efforts.
Pro tip: If you have a marketing person in house (a designated person who handles your marketing) then a marketing budget is going to help them be successful in providing you with the best initiatives available to you.
We get it, a marketing budget is important – but how do I create one?
Here are some key topics you should consider when creating a marketing budget for your small business.
Length of Time
Many people assume that they have to create a yearly marketing budget, but your budget can be for whatever length of time you prefer. Planning out a year in advance can seem daunting and difficult, so maybe you want to begin with a quarter or 3 months.
What To Spend
No matter what you see on the internet, we are here to tell you – THERE IS NO MAGIC NUMBER. The amount of money you allocate for your marketing budget is going to depend on where you are in your business growth stage (just starting out vs. an established business), the amount of money you feel comfortable spending and setting aside, industry standards*, your revenue, and how large your company is.
*Looking at industry standards is NOT to play the comparison game, but instead to better understand your environment. If your industry is highly competitive and spending a lot of marketing dollars then you are going to likely need to spend a little more on marketing. This does not mean you have to spend the industry average, but it is important to keep this information in mind.
Pro tip: Budgets change. If you set a budget and find that you did not spend enough money, allocate more money in your next one! Making changes is not frowned upon and you don’t have to be right all the time. Learn and make changes!
Type of Budget
How you set up your budget is completely up to you. Many companies allocate a certain percentage of their revenue to their marketing, but if you feel more comfortable spending a fixed amount of money instead of a percentage then do that! Budgets can also be objective based. This means that your marketing budget is going to be based on how well your initiatives are meeting specific goals. While this is a great format to use in the terms of goal setting – it is important to remember that this can be a little more difficult to set up and involves a lot more planning.
Why is percentage based budgets so popular? With a percentage based budget, as your business grows your marketing budget will grow as well. For example, if you set aside 20% of your revenue each year and your business makes more money this year then your marketing budget will also increase equally to the amount of money you exceeded expectations.
For a deeper dive into marketing budgets, check out our episode of the Small Owned Business (S.O.B.) Marketing podcast. Watch on YouTube or down below, or listen wherever you get your podcast fix!
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Feel free to share your thoughts with me, I can be reached at vivian@theseasonedmarketer.com!
Looking for more free marketing tips and content specifically for small business owners? Check out our podcast, S.O.B. Marketing Podcast. Every Wednesday we discuss a new topic to help small business owners take on marketing on their own. Listen to our episode of the S.O.B. Marketing podcast wherever you get your podcasts or watch on YouTube! Have a topic you want us to discuss? Email us at Help@TheSeasonedMarketer.com!
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