Tips for How to Spend Your Marketing DollarsJul92018
In theory, you have to Spend $$ to Make $$. Most often it’s easier to say than do.
The challenge of small business owners is knowing how best to invest funds in a manner that actually generates a return on their investment – rather than just spending for the sake of spending.
Recommendations from the Small Business Administration
The U.S. Small Business Administration (SBA) recommends as a guideline that small businesses earning less than $5 million in annual revenue should spend about 7-8% of that revenue on marketing. That money should include both brand development (website, blogs, social media, etc.) as well as direct promotion (advertising, sponsorships, etc.)
Startup businesses may want to spend less, perhaps 2-5% of revenue.
Your marketing budget will be dependant upon a variety of factors including:
- The industry you’re in.
- The size of your revenue.
- Needs as far as sales, brand awareness, leads, etc
- Your current level of growth and how much you can handle in the coming year.
The SBA suggests:
According to the most recent Census, there are 27.9 million small in the United States. That’s not counting big businesses. Competition dictates, marketing is essential to let prospective customers know your business exists, and what your business offers.
The more precise target market a small business can focus on, the better your marketing results and the more apt those business are to retain long term customer loyalty.
Online marketing is more likely than traditional marketing methods to produce quick results. However, most marketing methods may take months to see monetary results.
While some people feel marketing is a waste of time and money, it’s been proven that marketing is only a waste of money if it’s not executed wisely.
Spending more doesn’t necessarily translate to more buying customers. Effective marketing depends upon a definitive marketing plan that targets specific customer needs.
A business website in tandem with a Social media presence work together to spread Brand awareness and elevated website traffic.
Additional SBA resources:
How to Get Started with Your Online Marketing Strategy
- Educate yourself so you have a good grasp on what Online Marketing is. If you already wear too many hats in your business, then hire a marketing professional to do all the work with placing and monitoring your content and ads.
- Understand your budget and limitations and examine which areas of online paid marketing will best benefit the stage your business is in. If you're a new company or an established one that's lacking in Brand awareness, then you may decide more funds should be funneled to Brand Awareness.
- Determine which channels you should spend money and which channels you can boost organically.
- Understand what your goals are, define them, implement, and then tweak until you're seeing results that meet your goals.
- Create your small business marketing plan for the upcoming year. Reference it frequently to see if you're on track to meet your goals.
While you should try to learn what your peer businesses are spending on marketing, bottom line is – it may not really matter.
What matters is to consider components specific to your business:
- What’s worked and not worked in the past?
- What forms of media have the ability to meet your goals and what is the cost to meet your objective?
- What’s the stage and size of your business, and is it worth the investment to spend more marketing dollars now, rather than next year?
- What will it take for you to stand out from your competition?
In order to build a relevant marketing budget, you need to have data from your sales analysis such as:
- How Many Site visits per month
- How Many Leads you’re generating per month
- How Many Of the Leads convert to Sales Qualified Leads
- How Many Leads convert into opportunities
- How Many Of those opportunities close as new Sales
You need to determine what the cost is to generate Sales Qualified Leads by taking into consideration the cost of: website development, outsourced content creation, Pay-Per-Click, time spent by marketing and/or sales to nurture these leads, etc.
Download Free Marketing Templates
SCORE for an Annual Marketing Budget Template
You can also get free help completing it either online or at the SCORE chapter near you.
Online Budget Calculators for Determining a Business Marketing Budget:Return