How To Construct a Marketing Budget for Your Business
Creating a budget is an important step in marketing a business. According to a survey conducted by Clutch, almost half of all small business owners are planning to spend more on marketing in 2018 than the year prior. However, it’s important for business owners to set a budget; otherwise, they’ll have an ineffective marketing campaign that drains their business’s finances.
Prepare Your Finances
The first step to constructing a marketing budget is preparing finances. This means analyzing revenue, expenses and debt liabilities. Ideally, a business’s revenue should be greater than the total of its debt liabilities and expenses, indicating disposable income that can be used for activities like marketing. If a business’s revenue is less than the total of its expenses and debt liabilities, it may struggle to fund an effective marketing strategy.
Identify Marketing Channels
Business owners must also identify their preferred marketing channels when setting a budget. According to Statista, a website is the most popular marketing channel for U.S. businesses, followed by social media in a close second. There are different ways to promote a business website, however, some of which cost more than others.
Pay-per-click (PPC) marketing involves creating website ads that appear in the search results. The cost for each click can range anywhere from a few pennies to $50. With search engine optimization (SEO), on the other hand, business owners can generate website clicks and traffic at virtually no cost.
Business owners should consider their projected growth when creating a marketing budget. If a business owner expects his or her business to grow quickly, they may spend more on marketing. Increasing marketing spending helps businesses grow more painlessly by increasing brand exposure and driving new sales. If a business owner doesn’t expect strong growth, though, he or she may cut back on their marketing spending.
Defining Your Budget
Now comes the process of deciding exactly how much the business owner wants to spend on his or her marketing strategy. The U.S. Small Business Administration (SBA) says businesses should spend about 7 percent to 8 percent of their gross revenue on marketing. This is usually a good format to follow. However, if a business is losing a substantial amount of money, opting for a lower budget may prove more effective.
Constructing a marketing budget will help business owners stay on track while preventing overspending. Business owners should use these tips to create an effective marketing budget.