6 steps to creating a marketing budget to grow your business
3rd, Dec 2017
One of the biggest reasons marketing fails is because firms don’t set aside appropriate resources to getting it done. Regardless of the size of your budget, if you want to be effective, you need to think carefully about how and where you spend your time and money. How do you do that?
1. Have a plan. The best way to ensure you are spending money effectively is to first develop a marketing plan that outlines your marketing message, who you want to target and how you are going to reach them.
The plan should also lay out your strategic and financial goals. Are you looking to grow revenue? Raise your profile and increase brand awareness? Move into new markets? Be very specific about your goals. For example, it’s not enough to say you want to make more money. How much do you want to grow? Where do you want to grow (e.g. focus on a certain part of your business or up-selling existing clients)?
2. Understand where you are now. In building your budget for next year, first review your marketing expenses for this year. Analyze exactly where your money went and evaluate each expense to determine whether to increase, decrease or eliminate the expense. If you are new to marketing, you will need to do research to figure out the various costs for different types of marketing.
Next, you should look at your business. Are you satisfied with how you are doing? What is working best/worst in your business? Also consider future trends (short-term and long-term) in your business, industry, client base and the overall economy. Often firms will continue with the same budget year after year. They are hesitant to try anything new and they don’t make changes to reflect their business reality, trends or goals. Marketing takes time to work so you don’t want to wait until your business is in a downturn to start marketing.
3. Track and review your results. Part of understanding where you are now involves looking at real metrics rather than assuming you know what is going on. There is rarely a straight line between a marketing expense and actual new business. Instead, most business comes after multiple and consistent touch points with the prospect or referral source (ex. networking, meetings, emails, calls, social media, etc.). However, you should still look at metrics. For example, track calls, social media engagement, website and email analytics and other activities. Know the process for how you get new business – how many calls turn into a consult, how many become clients, how did the person hear about you, how did you meet the referral source, and did the prospect look at your website or social media before they called you. Focus on the metrics most important to your business, marketing plan and goals.
4. Determine your real costs. As mentioned above, write down where you are spending your money now as a starting point. However, you want to make sure you have factored in all the costs, including planning, implementation and monitoring your marketing. Also look at time spent on marketing. For example, if you have someone within the firm who is handling marketing along with other responsibilities (ex. office manager, receptionist, etc.), you should allocate a portion of the salary to marketing. In addition, you should consider how time is spent by you and others at the firm on marketing. Can some of those activities be delegated? Remember time is money so if someone else can handle a task more effectively (because of their skill level) or less expensively, then it may make sense to delegate. Just because you didn’t write out a check for marketing, doesn’t mean it didn’t cost you anything.
5. Figure out what you want to spend. A common question firms ask is how much to spend on marketing. That depends on where you are starting from, where you want to get to and how much time you have to accomplish your goals. If you’ve done little marketing in the past or you are now moving into new markets and you want to grow significantly in a short period of time, that’s very different than if you have been steadily marketing your firm and now want to focus on incrementally increasing your revenue in your core business. Firms often want to know what others spend. You can easily use Google to find out average marketing expenditures in your industry, but that tells you nothing about how successful the average firm was with their marketing. Marketing should be viewed as an investment in your business, not a cost. You must figure out what the investment is worth to you. If you are fearful, then start small and gradually increase your investment over time.
6. Have some unallocated money set aside. Over the course of the year, you may want to make changes to your budget. Maybe you want to take advantage of some unexpected opportunities or you need to counteract some negative business developments. It’s good to have some extra money in the budget for these possibilities.
There is no optimal budget for firms. If you want to be successful, start your year off right with a budget that is tailored to your needs and goals.
If you need help creating a marketing plan or budget, contact us for a consultation.
Tagged: budgeting, operations and process, return on investment