Marketing for small businesses is critical for growth, especially during the early stages of a company. That’s why it’s so important to create a marketing budget early on.
When people think of marketing budgets, they often default to advertising, and with good reason. Advertising is the fastest way to reach potential customers. An advertisement budget for small businesses can include digital ads, social media ads, paper ads, billboards, mail, commercials, and more. But you can also invest in content creation, website optimization, and search engine optimization (SEO). If you’re overwhelmed by a flood of marketing options, and you’re not sure how to invest, let’s start with the basics. Here are some tips to create a marketing budget for small businesses.
Identify Marketing Goals
The first step in creating a marketing budget is the most important (and perhaps the most difficult). Your marketing goals will drive the way you spend, measure success, and execute on a marketing plan. These are not one-size-fits-all across businesses. Online retailers should have different goals than restaurants. Landscaping companies should have different goals than tech startups.
One common pitfall in goal-setting: businesses often fail to connect goals to business objectives or they fail to set measurable goals in marketing. However you attempt to invest in marketing, make sure there are measurable targets that you can reasonably connect to business revenue. If you’re investing in lead-generating activity, it will be easy. If you’re investing in something less tangible, like traditional advertising (television, radio, billboards, etc), try to isolate those campaigns so you can see direct correlation with a change in business performance.
You can create more specific goals for website traffic, search term rankings, or social media followers. But keep in mind that you want monetary return on your investment. So be mindful of the big picture of how these investments are helping your business make money.
Consider All Costs
Once you identify your goals, you need to compare the prices with the amount of money you have available to use for marketing. Some marketing experts say that the average marketing budget for small businesses is 7-8% of the business’ revenue. Again, take it with a grain of salt as small business models vary dramatically.
Creating separate categories of advertisements and dividing money into each category makes it easier to follow a budget. For example, you might divide your investment as follows:
- Social Media Ads
- Online Advertising
- Business Website
- Videos or Video Ads
- Paper Ads
You can also consider free organic marketing in lieu of investment of some of these areas. Even on a tight budget, it’s important to keep marketing your business.
Be Flexible
The prices you put into your categories can of course be adjusted in the future if there is a specific category that is pulling in more business. Flexibility is very important because you can never fully predict what marketing strategy brings in the most money (especially when you first start testing). If you see one effort bringing in more profit, you can change each budget and give that specific category more money so you can reach your larger goals.
You never know what can come up when running your small business, so be flexible, and be prepared to make data-driven decisions between options if your marketing budget gets tight.
Tracking Marketing Expenses
As with all facets of a small business, it’s critical to track what you spend on marketing. Tracking expenses across departments will help you avoid a cash flow crunch. Avoid spending money where you are not receiving feedback. If there’s not a direct line from the investment to the result, it’s easy to spend wastefully. This is especially important in digital marketing, where you likely pay for clicks, engagements, and followers. Cost-per-result can get out of hand quickly if you don’t track it.
When expenses AND results are tracked correctly, it can reveal what is really most effective for your marketing team, and it will produce the best outcome possible for your business.
Research Competition
Keeping up to date with your competitors will give you good insight on which marketing strategies can be the most effective. Monitor your major competitors’ advertisements. Monitor their digital content and their search rankings. This will help you identify areas to invest, and potential gaps where your business can capitalize. Once you learn, you can adjust your marketing budget to invest in an effective strategy for your small business.
Once you establish a baseline for return on different marketing investments, you will be able to make more accurate decisions and projections. The starting budget will change in many ways until you find what works best and brings in the most business. It can be challenging, but with the right preparation and focus, you can find the most effective ways to bring in business from your small business marketing budget.
