How should small business owners allocate their marketing budget?
Creating the right marketing budget for your business is all about setting goals, allocating your money wisely, and really understanding your business. Whether you’re a brand new small business owner just getting started or looking to take your business to the next level, if you’re looking to allocate your small business marketing budget, you’ve come to the right place.
Although marketing has many components, you can adjust the amounts you spend over time based on what works most effectively to help your business. Read on to learn the best tips and tricks from other small business owners and experts on how you should allocate your marketing budget.
Understand your return on investment
Nathalie Walton, co-founder and CEO Attentive
Having a clear understanding of your return on investment (ROI) and how you will measure it before you start paying for marketing will let you know if your marketing is working or not. You can calculate an expected ROI before launching new campaigns to see if there is enough potential value in those campaigns, and if not, you can refine them further until you achieve a good expected return on investment. Once you find campaigns with sufficient expected ROI, you can determine how much of your marketing budget to spend on those campaigns.
Define marketing objectives
Rachel Roff, Founder and CEO Urban skin treatment
The most important thing you need to do before allocating your marketing budget is to set goals. Be specific about what you want to achieve when setting your marketing goals and make sure you can measure whether you are succeeding or not. Your goals should also be realistic and relevant to what you want to accomplish overall with your business.
Once you have specific goals, you can then determine how best to allocate your budget to help you achieve those goals. For example, if you set a goal of getting 10 new leads by the end of the quarter, you can focus a large portion of your marketing budget on things like paid social media marketing tactics, such as lead capture forms on Facebook. But without knowing your goals up front, you won’t know which areas to spend your budget on right from the start.
Look at your income
Matt Miller, CEO embroiderer
When it comes to allocating your small business marketing budget, you must first look at your business revenue. Most small businesses looking to grow allocate around 7-8% of their projected gross revenue to marketing, as this will help establish your brand in the market, while giving you the amount of growth your business can handle. Your marketing budget should include all brand building costs as well as things like advertising campaigns and events that you use to promote your business.
Invest in online advertising
Daniel Patrick, Founder DANIEL-PATRICK
One of the main components of your small business marketing budget should be to invest in online advertising. This should be done through social media platforms, such as Facebook, LinkedIn, TikTok, Instagram or whatever platform suits your business best. You need to allocate money to creating content for these platforms and creating ads, or growing organically through the posts you create. You can also use search engine advertising methods such as Good Ads to boost your business’s presence in online search results. With this method, set aside at least $1,000 per month for best results.
start small
Matthew Mundt, Founder and CEO Hug Sleep
When creating your business’s marketing budget, it’s important to start small and grow. Be sure to pay attention to the quality of your ads, then start increasing the budget of your top-performing ads. This will help ensure that you are making a smart investment which will in turn increase your business revenue.
Focus on inbound marketing
Inesa PonomariovaiteFounder Nesa hemp
If your business is working on a tighter budget or wants to save money on marketing, focus on inbound work, where customers are looking for your business, instead of your business looking for customers. These types of strategies can include using pay-per-click campaigns, updating your website, posting on social media, and using keyword-optimized blogs. It can help your business generate more leads at a fraction of the cost.
Solidify your brand identity
Chris Gadek, Head of Growth Quick announcement
If you have a new small business, it’s important to set aside a base amount of your initial marketing budget to solidify your brand identity. Whether it’s designing a great logo to attract customers or finding ways to apply your brand image throughout your business, be sure to use your marketing dollars to get the most out of branding, especially when your business is just getting started.
Budget reserved for the training of internal staff
Melanie Bedwell, eCommerce Manager OLIPOP
While some companies tend to outsource marketing, if your marketing team is in-house, then you’ll want to allocate some of your marketing budget to training in-house staff and keeping them up-to-date with the latest market strategies and trends. To determine how much of your budget should be set aside for training, you must first determine the current level of your team, then think about the most effective training ideas. This might include sending your team to conferences, encouraging knowledge sharing among employees, launching an online newsletter, or having your marketing team participate in engaging webinars.
Consider the stage of growth of your business
Jay Levitt, Founder and CEO lofta
A key part of creating the best marketing budget for your business is considering the stage of growth your business is in. If your business is looking for steady growth over a long period of time, you’ll want to focus your budget on getting new customers through inbound marketing. However, if your business is looking for rapid growth, you need to focus on revenue and quick marketing wins such as improved on-page SEO, easy content creation, and email campaigns.
Social media and influencer marketing
Hayley Albright, Senior Brand and Customer Experience Manager Xena Workwear
Small business owners need to allocate more of their marketing budgets to social media and influencer marketing to be successful. An active social media presence allows followers to engage with your business and reach new consumers through organic posts, ads, and being tagged by others.
Businesses can create relevant and timely content that shows brand values and mission, and work with influencers who share the same values. Influencer collaboration can increase your brand awareness and drive traffic to the company’s website and social media page. With a strong social media presence, small businesses can effectively increase their sales and engage with their target audience.
Focus on brand identity and content
Mary Ann O’Brien, Founder and CEO OBI creation
Although all categories are equally important, advertising, PR and social media all evolve from content. Without good content, your money will be wasted in other areas. Focus most of your budget on getting your brand identity and message right. Then invest in content development and, finally, promote that content to your ideal audience through paid and earned placements.
Find the break-even point for your business
Christopher Tompkins, Founder and CEO The green light! Agency
I always like to look at the profit margin first and then what the breakeven point would be. By understanding this number, you can see what your base marketing budget might be. Then I would do direct competitor analysis and see where they are having the most success. Once that is known, invest in that marketing vehicle first and keep the rest on your radar.
Overall, creating a marketing budget is a great way to help your small business grow. Remember to track your marketing costs and take the time to analyze which techniques work best for your business. You should also monitor your projections and see if they match your actual spending. Be sure to make changes and update your budget regularly so you can create the best marketing budget for your business.
Posted on November 30, 2021
