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Developing a Small Business Marketing Budget
Developing a marketing strategy for a business involves a lot of moving parts. You must have established goals (that are, or course, SMART: Specific, Measurable, Achievable; Realistic; Time-Bound); a reasonable understanding of the different types of marketing activities that businesses can undertake; and perhaps most valuable of all – you have to have the time to execute your strategy. Even with all of that said, none of those factors can come together to form a marketing strategy without money and having a well-constructed marketing budget around that is critical. There’s more to it than simply putting aside a certain amount of money every day, week, or month – it takes careful and considered planning, and a good level of understanding about the different factors that impact your business. Here are some things to think about when setting a budget for your marketing activities…
Understand Your Leads and Conversions
Measuring success in any marketing endeavour requires relevant metrics, and a big one is return on investment (ROI). Taking one step further back, you won’t be able to measure your ROI with much certainty if you don’t know the value of your leads to begin with, or how many you usually bring in for any given time period (for our purposes, let’s use a month as our basis).
Make sure you can measure how many leads you typically generate over a month, and how many of those are qualified vs. unqualified. That is, how many are legitimate potential customers (you have something to offer them) vs. those who won’t find what they’re looking for at your business. Then, determine how many of these qualified leads are converted to actual sales, and what the average value of that sale is. Then as you develop a budget for your marketing, you’ll be able to factor in the value of a converted lead, how much it would cost to acquire that lead (based on spend), and then calculate how much you may need to invest in marketing to have meaningful impact on your bottom line.
Understand Your Costs
When determining how much to spend on your small business marketing, an important consideration is whether you take on the tasks in-house or outsource to an agency. While the financial outlay of outsourcing may be somewhat cost-prohibitive to some businesses, the time cost involved in trying to do it yourself (or leveraging your team) may in fact be more detrimental in the long run. Whether you do decide to handle it internally or take it to the experts, knowing what it may cost you long-term forms a significant part of your budget.
Get a good sense of what the different parts of your marketing mix may cost you, as the different avenues you could take will vary in terms of financial input – pay-per-click online advertising (e.g. Google Ads) and mass media like TV and radio advertising will require much greater investment in the short term than social media and content marketing – not to mention the fact that each medium requires a different commitment in terms of time spent developing the actual marketing material. Practically speaking, there isn’t a one-size-fits-all approach, so costs will naturally differ based on your industry, phase of business growth, and of course your goals and overall marketing strategy.
Build Your Marketing Budget Around Your Business Goals
You might be looking to increase brand awareness, boost profit by 15% in the coming year, or raise your overall client base by 250. No matter what your goals are for growing your business, tailor your strategy (and therefore your budget) around those goals. If you’re planning to lay the foundations for steady, sustainable growth over a number of years, then things like content marketing and value-adding social media pieces may be the right way to go. While you won’t see any ground-breaking increases in revenue, you’ll be sewing the seeds for establishing your business as an industry leader, gaining the trust of the community, and potentially raising the SEO (Search Engine Optimisation) ranking of your website – which in turn is a great lead generator for your business moving forward. All of that with a relatively small financial outlay.
If faster growth is on the cards, higher level of investment may be required. One common route is revamping your tired, outdated website to be not only a point of contact and shopfront for your business, but a lead magnet and sales tool as well. Direct marketing through TV or radio is another option, where you can reach a mass audience in a short space of time. Again, remember that these strategies will come with a higher cost, so when determining your marketing budget it’s crucial to understand exactly what you can afford to spend.
Other Marketing Budget Considerations and Next Steps
As with just about everything in business, nothing stands still. Your marketing budget is no different – rather than a set-and-forget task that you do once, be sure to regularly review your budget and adjust accordingly. You might find that you’re spending money in the wrong places, or perhaps discover that there’s room to increase investment in other areas and reap the rewards!
The MP+ Business Growth Model is a handy tool that can show you how retaining more customers, increasing leads, improving conversion rates, adjusting margins and increasing the average value of sales can have a significant impact on your bottom line. You can download that for free here.
Furthermore, the Brand Plus and Business Improvement teams at McKinley Plowman work together to help clients take the next steps in their business – so if you’re ready for growth in 2021, get in touch with us today via our website at www.mckinleyplowman.com.au or give us a call on 08 9301 2200 (Joondalup) or 08 9361 3300 (Victoria Park).
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