It does not matter if you own a small business or run a billion dollar corporation, marketing is essential to the success and growth of every business. Unfortunately many small businesses don’t set aside enough money for their marketing campaigns.
I recently got connected with a business that was investing a lot of money on a new product for its already impressive product line. In my mind, the product would definitely be popular. However, the product was in its own little silo was the sales and marketing teams were off doing their own things. This resulted in no promotional material or marketing plan for the new product at all.
Products and services do not sell themselves. Don’t ignore marketing; if you do, you will not see the sales your business needs to not only thrive, but survive as well.
How to Calculate A Marketing Budget
Many businesses allocate a percentage of actual or projected gross revenues – usually up to 5%. The allocation is determined by different aspects; the industry the company is in, the size of the corporation, and the current condition of the business. For example, during the early brand-building years retail businesses commonly spend as much to 20% of sales on their marketing plans.
According to the United States Small Business Administration, “small businesses with revenues less than $5 million should allocate 7-8% of their revenues to marketing.” This budget should be split between brand development costs (such as your website) and the costs of promoting your business like search engine optimization or other methods of internet advertising.
Spend Wisely and Plan
Lots of times businesses will just spend haphazardly. This is especially dangerous for small business owners who are investing 10% of their profits into marketing. Calculating return on investment, commonly called ROI, is a must. If your marketing strategy is not bringing you a steady increase in clients, leads, and profits, then you need to rethink your strategy. Sit down with some professionals, do some research, and begin to develop trial-and-error marketing strategies. After a couple months, sit down and analyze the success of your campaigns and adjust if necessary. Consider unsuccessful marketing campaigns as opportunities to learn and grow rather than failures.