How much do you spend on marketing? How do you decide what is the right amount? When do you set your budget and how flexible is it? Marketing spending shouldn’t be an afterthought. It should be a well thought out investment; planning not only how many dollars to spend but where.
First, let’s consider what is all involved when we talk about marketing costs. It isn’t just advertising; there is a lot more involved. Are you having items printed, like postcards or banners? Are you buying promotional items to giveaway, like pens or notepads? Are you paying affiliates to market your products? Do you have a graphic designer that you contract with? All of these items are going toward your marketing budget and shouldn’t be overlooked.
We’ve all heard the old adage that you have to ‘spend money to make money.’ So, what are some basic parameters that you can set for yourself when determining how much you should actually spend? It’s a delicate balance, especially for new business owners.
Here are some tips that I’ve found helpful.
1. Think of your marketing budget as an investment.
Ideally, the money you invest here should be paid back to you and bring even more income with it. If you’re new to the game and not basing your spending on previous years’ sales, then also consider it a loan to yourself and to the success of your business. As with all investments, there isn’t a 100 percent guarantee of return. So, invest wisely. Research the methods you plan to use. Compare results others have had, if you’re able. If your investment isn’t doing particularly well, change it up; try a different medium.
2. You don’t have to spend a fortune.
Don’t assume that you have to sink a ton of money into your budget in order for it to be successful. There are a lot of low-cost marketing options that you can, and should, explore. With the continuous growth of the internet and social media, don’t overlook these options. Make sure that you spend money on an attractive, well-functioning website. Oftentimes this will be the first line of contact with your customers and you want to make a good impression. If you’re local, there should be a lot of small, affordable advertising options in your area. Also, be sure to take advantage of press releases and other media relations efforts that can help grow your business with little or no cost.
3. How much did you make last year?
Consider what your income was last year. Or, if you’re just starting out, consider what you plan for it to be this year. Basing your budget on a percentage of the previous year’s sales is a popular way to determine your baseline. According to the Small Business Association, small businesses (with revenue of less than $5 million) should plan to spend seven to eight percent of their revenue on marketing. Keep in mind, there should be a plan behind this spending. I recommend continuing with proven methods that are working well for you. But, at the same time, sprinkle in some variety and try new things. You never know when a medium that’s been very effective for you in the past will drop off for whatever reason.
4. Remain flexible.
As trends and mediums change, so should you. As your revenue grows, or possibly shrinks, you may need to adjust your numbers. Always pay attention to what your marketing is or isn’t generating. Responsible business owners are good stewards of their money, spending where it’s most needed and most beneficial to their bottom line.
Dawn Berryman is the founder of MarketMommy.com and Market Mommy:: The Blog, online marketing resources for mom entrepreneurs. Market Mommy shows moms how and where to market their businesses. She holds a B.A. from Indiana University and has worked in the marketing/communications field for more than 11 years. She resides in rural Ohio with her husband and three children. For more information, please see: Market Mommy.