Develop a Marketing Budget Around Your Goals
Part 1 of this series ended with this question: How much will your business need to allocate to achieve the revenue and profitability growth you’d like to see?
A marketing budget is about reaching a growth goal. How much would you like to grow over the next 12 months. It’s important to stretch, but be realistic. The average small business under $5 million in annual revenue grows about 7.8% a year. Keep in mind, inflation requires you to grow at least 2% to stay flat!
A competent internet marketing company will ask how you feel about your existing marketing strategy? If unhappy with it, you should make room in your marketing budget to improve or reimagine. They should also ask if you have a way to understand how your marketing is performing? If you don’t have visibility, you should include new or better business dashboards in your budget. Your internet marketing company should be able to create these dashboards for you.
Once you’ve determined what’s most important to accomplish over the next 12 months, you and your internet marketing company need to estimate how much should be spent on marketing in total. For a high-level marketing budget, we recommend following the guidance of the Small Business Administration, which is 7% to 8% of your gross revenue. If you’re company is bringing in more than $5 million in annual gross revenue, your net profit is considerably higher than 10% to 12%, or you’re in a ridiculously competitive industry – you may need to increase your overall marketing budget to be realistic.
Once you have a budget in mind and a plan on where to focus marketing effort, it’s time to allocate budget to get things done. Depending on your high-level marketing goals, you’ll have a different mix of the following marketing initiatives:
- online advertising (Google AdWords, Facebook Advertising, etc.)
- getting more leads
- creating or revising content (blog posts, social posts, explainer videos, etc.)
- managing social media
- email or text marketing
- getting more customer reviews
- new or revised website
- creating or revising your marketing strategy
- new or revised logo
- getting found on search engines
- monitoring website traffic and performance
- upgrading video or photography
The small business administration doesn’t provide much guidance when you get down to the details of a marketing budget. As an internet marketing company, we needed a way to help ourselves and our clients with budgeting, so we developed a simple, yet powerful marketing budget calculator. It will help you build a reasonable marketing budget for your business.
Part 3 in this series will focus on answering this question: How do you know who to target with your marketing efforts?
Part 2: What Should a Digital Marketing Firm Do for Your Small Business? by John-Scott Dixon and Josh Prior is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.