Creating the right marketing budget for your business is all about setting goals, allocating your money wisely, and truly understanding your business. Whether you are a brand new small business owner just starting out, or are looking to take your business to the next level, if you are looking to allocate the marketing budget for your small business, you are in the right place.
While marketing has many components, you can adjust the amounts you spend over time based on what is working most effectively to help your business. Read on to learn the best tips and tricks from other small business owners and experts on how you should allocate your marketing budget.
Understand Your ROI
Nathalie Walton, Co-Founder and CEO Expectful
Having a clear understanding of your return on investment (ROI) and how you will measure it before you start paying for marketing will set you up to know whether or not your marketing is working or not. You can calculate an expected ROI before you start new campaigns to see if there is enough potential value in those campaigns, and if there isn’t you can refine them further until you reach a good expected ROI. Once you’ve found campaigns that have a sufficient expected ROI, you can determine what portion of your marketing budget to dedicate to those campaigns.
Set Marketing Goals
Rachel Roff, Founder and CEO Urban Skin Rx
The most important thing you need to do before allocating your marketing budget is to set goals. Be specific about what you want to achieve when setting your marketing goals and make sure you can measure whether you are successful or not. Your goals should also be realistic and be relevant to what you want to achieve overall with your business.
Once you have specific goals, you can then figure out how to best allocate your budget to help you achieve those goals. For example, if you set a goal of obtaining 10 new leads by the end of the quarter, you can focus a large portion of your marketing budget on things like paid social media marketing tactics like lead capture forms on Facebook. But without knowing your goals upfront, you won’t know which areas you should dedicate your budget to from the beginning.
Look at Your Revenue
Matt Miller, CEO Embroker
When it comes to allocating your small business’s marketing budget, first, you need to look at your business’s revenue. Most small businesses who are looking to grow allocate around 7-8% of projected gross revenue to marketing, as this will help to establish your brand in the marketplace, while also giving you the amount of growth that your business can handle. Your marketing budget should include all brand development costs as well as things like ad campaigns and events that you use to promote your business.
Invest in Online Advertising
Daniel Patrick, Founder DANIEL PATRICK
One of the main components of your small business’s marketing budget should be investing in online advertising. This should be done through social media platforms, such as Facebook, LinkedIn, TikTok, Instagram, or whichever platform makes the most sense for your business. You should allocate money for creating content for these platforms, and creating ads, or growing organically through the posts you create. You can also use search-engine advertising methods such as Good Ads to boost your business’s presence in online search results. With this method, set aside at least $1,000 per month for the best results.
Matthew Mundt, Founder and CEO Hug Sleep
When creating your company’s marketing budget, it is important to start small and then scale up. Be sure to pay attention to how well your ads do, and then start scaling up the budget for your most well-performing ads. This will help to make sure that you are making a smart investment that will in turn grow income for your company.
Focus on Inbound Marketing
Inesa Ponomariovaite, Founder Nesa’s Hemp
If your business is working with a smaller budget or wants to save money on marketing, focus on inbound working, where customers search for your business, instead of your business searching for customers. These types of strategies may include using pay-per-click campaigns, updating your website, social media outreach, and using keyword-optimized blogging. This can help your business to generate more leads at a fraction of the cost.
Solidify Your Brand Identity
Chris Gadek, Head of Growth AdQuick
If you have a new small business, it is important to set aside a core amount of your initial marketing budget to solidify your brand identity. Whether this is through designing a great logo to get customers through the door, or finding ways to apply your branding across your business, make sure you use your marketing budget to get the most out of branding, especially when your business is just starting off.
Set Aside Budget for Training Internal Staff
Melanie Bedwell, E-commerce Manager OLIPOP
While some companies tend to outsource for marketing, if your marketing team is in-house, then you will want to allocate part of your marketing budget for training internal staff and keeping them up to date with the latest strategies and market trends. To figure out how much of your budget should be set aside for training, you’ll first want to determine your team’s current level, and then think of the most effective training ideas. This can include sending your team to conferences, encouraging knowledge sharing among employees, beginning an e-learning newsletter, or having your marketing team participate in engaging webinars.
Consider Your Company’s Growth Stage
Jay Levitt, Founder and CEO Lofta
A key component to creating the best marketing budget for your company is to consider the growth stage that your business is in. If your company is looking for steady growth over a long period of time, then you’ll want to focus your budget on gaining new customers through inbound marketing. However, if your company is looking for rapid growth, then you should focus on revenue and generating marketing quick-wins such as improving on-page SEO, creating easy content, and email campaigns.
Social Media and Influencer Marketing
Hayley Albright, Senior Brand and Customer Experience Manager Xena Workwear
Small business owners need to allocate more of their marketing budgets towards social media and influencer marketing to succeed. An active social media presence allows followers to engage with your business and reach new consumers through organic posts, ads, and being tagged by others.
Companies can create relevant and timely content that shows the brand’s values and mission, and work with influencers who share like-minded values. Influencer collaboration can build awareness to your brand and drive traffic to the company’s website and social media page. With a strong social media presence, small businesses can effectively increase sales and interact with their target audience.
Focus on Brand Identity and Content
Mary Ann O’Brien, Founder and CEO OBI Creative
While all categories are equally important, advertising, PR and social media all ladder up from content. Without good content, your money will be wasted in other areas. Focus your largest chunk of budget dollars on getting your brand identity and messaging right. Invest next in developing content and, finally, in promoting that content to your ideal audiences through paid and earned placements.
Find Your Company’s Break-Even Point
Christopher Tompkins, Founder and CEO The Go! Agency
I always like to look at the profit margin first, and then at what the break-even point would be. By understanding this number, you can see what your baseline marketing budget could be. Next, I would do a direct competitor analysis and see where they are getting the most success. Once that is known, invest in that marketing vehicle first and keep the rest on your radar.
All in all, creating a marketing budget is a great way to help your small business grow. Remember to keep track of your marketing costs and take time to analyze which techniques are working the best for your business. You should also monitor your projections and see if they are aligned with your actual spending. Be sure to make changes and update your budget on a regular basis so that you can create the best marketing budget for your business.