How much should you spend on the marketing of your business? Rule of thumb is 10% of revenue…more if you want to make a huge impact, quickly.
Really? I hear you say. Yes. Really!
OK. Now I’ve got your attention. I’d like to talk about why having a marketing budget is so important, and share some simple steps to setting one.
The majority of business owners I work with do have a budget, of sorts. They spend money on a whole host of marketing activities. From attending business networking meetings, to the occasional advert in the local community magazine, or providing giveaways for charity prize draws. The trouble is that none of this spend is measured against a business goal, nor is it budgeted for in any formal way.
Is it worthwhile? Has it delivered results? Should they invest more in one thing and scrap another? Who knows? Your guess is as good as mine.
Now, if there is a plan and a budget in place…that’s a whole other story!
1) Set a goal
Your marketing budget is the means to your desired end. So, set a clear goal for your business – making sure it is specific & measureable – before you start budgeting.
You could have a couple of goals, for different parts of your business.
2) Set aside the money
Once you know your goal, you can work out the money it’ll take to achieve it. The (quick & dirty) way to estimate a marketing budget is the 10% rule… meaning your budget should sit somewhere around 10% of your revenue. This works well for ongoing growth. If you are a new business, or launching a new service and want to make a huge splash then this can increase to anywhere around 50% of revenue (for launch stage).
3) Be in it for the long-haul
You are setting budgets one year at a time, but don’t forget that marketing is all about results for years to come. Some of your results will naturally be geared towards driving immediate sales, but don’t under estimate the importance of budgeting to help you build a long-lasting, locally loved, brand.
Knee jerk marketing spend is not effective, or efficient. So, next time you take a call from a sales rep with a ‘great last minute deal’, put the brakes on before signing up.
Call me. Let’s have a chat about your goal, the tactics that will best get you there, and the budget you should allocate to achieve it.
Jill x
