Embarking upon the creation of a marketing plan can be a daunting prospect for a small business owner. Though many elements come together to support the conception and execution of an effective promotional strategy, deciding upon the required budget is among the most significant, and complex processes involved.
A clear marketing budget plan can equip entrepreneurs and decision-makers with the necessary framework to justify advertising spend, track results, and maximise growth opportunities as a result of successful execution. Such a plan should take into consideration the core company objectives, target market, and internal capacity for marketing implementation.
Read on to discover the necessary steps to follow to create a full marketing budget plan.
1. Identify Your Marketing and Business Objectives
Marketing efforts can only support your company’s progress if they are tailored to fulfil your business objectives.
As a budding business, your key goals may include establishing your brand’s reputation, earning a loyal customer base, and growing sales. Break these down into achievable, actionable goals for the coming quarter, fiscal year, and beyond.
Your marketing objectives would then need to work towards fulfilling those business goals within the given periods, and could consist of components such as recruiting new customers, increasing spend per customer, and boosting product-specific sales.
List these marketing objectives in order of priority. Those higher on the list should be allocated a more significant proportion of your marketing budget, compared to those projects that are likely to have a smaller impact on growth and other measurable outcomes.
2. Decide on Your Marketing Techniques
With your marketing objectives in hand, you must decide what approach to follow to see these come to fruition. Different marketing methods appeal to various consumer groups, and so defining your target customers beforehand is essential. Conduct market research to analyse the demographics that your ideal customers belong to, and outline their buying behaviour.
Based on the outcomes of this research, select the most favoured methods of communication, advertising, and current market trends that appeal to your specific buyer personas. Aim to strike a balance between online and offline promotion that is likely to achieve multi-touch communication with consumers. Certainly, each marketing method carries its own cost, so do the math and calculate the total amount of funding you estimate you will require to execute the ideal activities.
Small businesses can also review key competitors in this process, evaluate how they approach their shared target market, and gain important insights into what they are up against.
3. Consider Your Marketing Capacity
Who will be responsible for your marketing efforts internally? Do you have a dedicated promotion department or a sole marketing colleague? Will these tasks fall to you, the business owner?
The answers to these questions will help you determine your current marketing bandwidth. Particularly important for a small business, understanding this factor will support decisions around recruiting additional resources required to fulfil your plan adequately and therefore contribute to defining your budget.
Limited capacity can be addressed in many ways. Marketing automation tools, for example, can be an excellent investment well suited to modestly staffed marketing teams, aiding the timely execution of digital marketing and communication strategies. Freelancer workers, meanwhile, can be hired on an ad-hoc basis to support anything from content creation to communication plan scheduling. Finally, external marketing agencies can help in the creation of more prominent brand campaigns, as well as the execution of challenging offline activities such as events, tradeshows, and ad placements.
4. Take Note of Your Operational Marketing Costs
Small businesses should calculate the full extent of their marketing-specific operational costs, the amounts required to ensure the continuity of the general marketing operations of the company.
These may include the price of domain names, maintenance of company websites, required internal training, marketing team salaries, and more.
The costs will be part of your wider marketing budget, but should be noted as fixed costs, not available for adjustment, and not aimed at achieving particular business goals. Return on investment (ROI) can thus not be clearly calculated from these operational costs.
5. Set Your Budget
Following an evaluation of all of the above, you are now ready to finalise your marketing budget plan. Small businesses tend to allocate a portion of their revenues (or expected revenues for brand new startups) to fund their marketing. You have several approaches to choose from here, to identify an initial budget sum.
A cost-cautious business owner may dedicate 1-2% of revenues, while a more average plan could see 3-4% of revenues invested. An ambitious budget, meanwhile, would include a 5-6% investment into marketing.
Compare the budget calculations using these ratios to the expected cost you have generated throughout your research. Do any of these proposed budgets meet the funds required to execute the tailored marketing activities you have identified for your target audience? Do they cover your marketing capacity infrastructure, operational costs, and allow room for creative execution? Be sure to balance your expenditure between the channels that apply to your business, and appeal to your target consumers.
At this stage, you should adjust your budget plan to find common ground between the marketing cost allocation that makes the most sense for your small business, and the marketing investments already determined to be required to support your sales success and business growth. Detail the projected spend for every marketing activity per period, as well as the expected business impact and ROI.
6. Track Spending and ROI
Though the creation of your initial marketing budget plan may have come to an end, its monitoring, adjustment, and reinvestment will continue indefinitely, throughout the progress of your business. The more details you can gather regarding your budget spend and ROI, the better equipped you will be for these future steps moving forward.
Record every marketing-related spend, no matter how small. Reference these costs with your initial budget, to ensure your execution follows your original budget plan.
Monitor pre-defined ROI metrics and overall KPIs to evaluate the impact and success of your budget expenditure following each activity, too. This calculation will be vital to managing your budget, and making the necessary cost allocation adjustments per quarter, throughout the development of your business. Repeat impactful activities that prove to maximise investment, and reimagine the efforts that fall short of expected outcomes.
Consider your marketing budget as an essential investment in your small business. If executed well, its ROI can significantly contribute to the growth of your budding business, supporting the further development of your operations.
Approach your budget plan by considering your key business objectives, segmenting these into actionable projects with a particular aim. Evaluate both your existing marketing capacity and target audience to determine the most valuable marketing methods to invest in, as well as additional internal or external support that will be required to complete execution. Using these useful insights, you can now work towards crafting your marketing budget plan.
Once completed, with execution underway, don’t forget to gather detailed information regarding the budget spend and results of each component of your plan. Use this data to inform further budget decisions, and ultimately move closer to influencing business success.
Was this guide helpful? Is there any other advice you would offer for setting a marketing budget for a small business? Let us know your thoughts in the comment section below.