All businesses need to prepare a marketing budget. Small businesses need a budget just as much as large ones since they have less money to work with. But a budget by itself is not enough. A business must have a marketing plan to meet its objectives.
Many businesses allocate a percentage of revenue to their marketing plan
That percentage depends upon where they are in the life of their company:
- A well-established company, with longtime customers and new ones being added steadily requires just 2 to 3%.
- If the business is established but adding new products and services on a regular basis then 5% is required.
- When a business is completing a period of increased product development, 10% will be required. New products and services don’t sell themselves.
- The US small business administration recommends allocating 7 to 8% of revenue if total revenue is less than $5 million and margins are between 10 – 12%.
These budget percentages include all of the channels used for promotion and constitute a total marketing plan.
A marketing plan is not a license to spend
Rather, it funds a plan to cover marketing needs and should be allocated across all channels. The funds are best managed when established activities are funded at or near prior years’ levels and new activities are handled as projects. The projects should have expected results and itemized budget categories. As the project goes forward, marketing management must monitor expenditures versus budgeted amounts. They must also determine if results are as expected and if not, why not.
The question “Who are my target customers?” is the first question when working on marketing plans. The second is “What information are they looking for?” in making their buying decisions. Do your customers use magazines and newspapers, websites and social media sites or other media outlets for their information.
Spend your money where exposure to your target market is the greatest. If you are uncertain where they get news, ask them. As fellow business people, they will appreciate your interest.
Add one or several of these projects to your marketing plan:
- An active email program has the greatest return on investment. Smart companies began building an email list as soon as they recognize the opportunity. Costs are minimal and even a small response to email offers a high payback. Start your list with established customers and contacts. Give customers and prospects every opportunity to add their name your email list by adding that as a capability of your website and social media pages.
- Today’s young adults will be tomorrow’s major customers. Plus, they have strong feelings about things that catch their attention. So, they are today’s strong influencers. Don’t ignore them; make one of your projects initiation of a presence on their favorite social media sites. The top three are Snapchat, Facebook and Instagram. Although Facebook’s use is in decline it is still in the top three. If you are unfamiliar with these social media sites, get help from someone who knows how to make them pay off.
- Video has been of growing interest to many small businesses, but there remains a mystique about making videos. It’s the content and the delivery that makes video a winner. You don’t have to be a Hollywood director to make a good video. They only have to be good, not great. Visitors appreciate a chance to sit back and observe your information with a minimal amount of effort on their part.
Visitors to your site are looking for content, not entertainment
If the content is excellent they will ignore the quality of the video composition. Wistia is a company that offers video services and has a library of very helpful instructional videos. They recently produced a video comparing the results in spending varying amounts of money on the same topic. One video cost $1,000 to produce, a second cost $10,000 and a third cost $100,000. Their point was that clearly there was a production quality difference in the three, but the $1,000 video had as much informational value as the $100,000. Read about their experiment here:
https://wistia.com/learn/marketing/just-launched-three-soapbox-ads. I think you will be surprised at how effective the $1,000 video is.
The three project types above will improve your marketing plan. Add one or try all three. The content that you develop for one idea can (and should) be repurposed for the other two.