Creating a marketing budget for your small business is a delicate balancing act. On the one hand, the right investment can drive growth; on the other hand, the wrong investment can drain you. How do you get the balance right?
You need to create a marketing budget that advances your primary goals without hurting the day-to-day operations of your business. To point you in the right direction, here are 7 simple tips for creating a marketing budget that’s both effective and sustainable: If you need a refresh of marketing 101
Be realistic about future revenue
When trying to gauge sustainability, you need to develop a reasonable idea of what you’re going to be earning in the future, because it’s no use laying out a plan that’s sustainable based on your current revenue stream if you’re not confident that you can keep it up. When in doubt, take a bearish stance on your predicted performance.
Remember that you can always spend a little more in any given month, as it isn’t hard to boost existing investments or find new channels to experiment with — it’s much more complicated to start cutting back on costs, particularly since that tends to horribly skew results and leave you uncertain about which tactics are effective.
Commit to a percentage instead of a flat figure
A marketing budget should always scale with your business, because this ensures that you spend more when it’s warranted and cut back when times get tough. Committing, say, $400 each month to marketing isn’t the way to go, because that amount will stop getting results if your business triples in size — it also doesn’t factor in inflation, so $400 today might not be able to get you anything like the same results in a couple of years.
Which percentage you go for is up to you, but standard practice has marketing roughly around the 10% mark (using your total revenue). Add up all your other commitments and see what you have left, but be sure to leave some comfort room to go towards emergency costs.
Invest in enduring tactics
Some marketing tactics, like running PPC campaigns, are reliably effective but have no lingering effects. While you’re running ads, they generate clicks and interest, but once you take them down, the effects disappear as quickly as they arrived. Some marketing tactics can achieve fundamental improvements, though, such as SEM (search engine marketing).
If you commit a good portion of your budget to carrying out SEO work, the ranking boosts that result will continue to return value well into the future. Think about the broader worth of your business website. It isn’t solely determined by advertising revenue, as some think, or even by its overall earnings: there’s also the vital matter of your brand image. Bolster your brand, and that value will stick with you as your business grows.
Carefully configure tracking analytics
Marketing isn’t merely something to be ticked off as an obligation, like changing passwords or tallying tax obligations. It’s done in service of a goal — getting your business name out there and driving sales and interest — and must be judged accordingly, because if your marketing campaign isn’t returning any value, it’s a waste of time.
To meaningfully assess performance, you need to be tracking analytics as broadly and intelligently as possible. Every one of your marketing tactics should have a defined way of returning (and exceeding) the amount committed to it in your budget: for instance, marketing emails should use tagged links so you can check to see which visits and which sales they’re responsible for.
Factor in all possible costs
At the very least, you’re sure to factor in the core costs of your marketing plan, some of which may include paying for PPC ads, hiring an SEO consultant, hiring a photographer, and covering payroll for whichever employees you have concentrating on promotion. It’s not unusual for businesses to overlook other costs, though, so you need to be mindful.
The classic example of an overlooked marketing cost is the time you spend on management and oversight. Suppose that you have your team working on marketing content, but you spend several hours each week making minor tweaks and requesting further edits — as the owner of the business, your time is valuable, and any time you spend on the marketing campaign takes away from your most important tasks (such as networking and making sales).
Research software alternatives
Many business costs can’t realistically be avoided, such as getting basic office equipment, but software costs often can. This is because the internet offers near-boundless choices when you’re looking for a tool, and there are plenty of great utilities that cost less than mainstream solutions but offer comparable functionality (some are even free at basic tiers).
When you have an ongoing marketing strategy, you need tools for content production, image editing, email distribution, and social media management. If you just go with the first ones you read about, you might end up paying far more than you need to, so do a fair amount of research before committing — and stay on the lookout for the arrival of new tools that might be able to save you some money.
Build your budget to be flexible
Creating a budget sounds so definitive: like you’re setting something out to be followed in perpetuity, never changing with the times. And while it’s true that you should define an outline and stick to it, that outline can (and should) allow a lot of room for adjustment.
This is largely because the marketing world changes quickly, and you can’t know what channels and technological avenues are waiting just over the horizon. It makes no sense to commit entirely to Facebook advertising, regardless of the platform’s dominance, because the terms and conditions might change next month — or maybe another platform will supplant Facebook, just as it took over from MySpace.
To Sum Up
Provided you go about it correctly, you shouldn’t find it too difficult to set out a budget that will scale with your business as it grows and avoid cutting into the resources you need to keep your regular operations going. Leave room to work in new techniques and technologies, and you’ll find yourself in a strong position.
Kayleigh Alexandra is a content writer for Micro Startups — a site dedicated to spreading the word about startups and small businesses of all shapes and sizes. Visit the blog for the latest micro biz news and inspiring entrepreneurial stories. Follow us on Twitter @getmicrostarted.