1. Start with your business goals. Your marketing budget should directly support your business goals. Are you looking to increase brand awareness? Grow revenue? Launch a new service? Expand your client base? Be specific about your objectives and how quickly you want to achieve them. It’s usually less expensive to pursue steady, incremental growth in your existing business than to seek aggressive revenue targets or reach out to new markets.

2. Translate business goals into a marketing plan. You need to develop more details to figure out your budget. For example, if your goal is to increase revenue by 10%, where will that business come from? Upselling existing clients? Increasing your networking? Other ways? Estimate how many new clients/matters you’ll need to achieve that goal and outline what you’ll do to generate those leads. Who will you target with your marketing? What types of marketing and strategies will you use? Write it down in a marketing plan. Later you’ll go back to your plan to prioritize your strategies as you develop your budget.

3. Research relevant benchmarks. A common benchmark for small professional service firms is to allocate 5-10% of annual gross revenue to marketing. However, if you’re starting out, looking for high growth, expanding into new territory or services or in a highly competitive industry or geographic area, aim for the higher end of that range or even more. If you’re focused on maintaining revenue or growing slowly, the lower end might suffice.

Also, research norms in your industry and gather competitor information where possible. At a minimum, you can investigate what marketing channels your competitors are using to get a sense of what they may be spending. However, don’t blindly follow others as every firm has different circumstances. Current economic trends may also vary greatly from past conditions. Finally, remember you’re looking at averages across many firms as opposed to those firms that may be the most successful.

4. Review your current marketing spend. If you’ve spent money on marketing previously, assess past expenditures. Where did your marketing dollars go? Do you know what tactics brought in the most leads or clients? If so, that can help you decide where to cut back or increase spending. If you aren’t tracking leads, start now so you’ll be in better shape next year.

Importantly, remember that new business is often the result of multiple marketing efforts continuing over time. For example, you meet a referral source through networking and keep in touch via in-person meetings, email marketing, social media marketing and other means. At some later point, the referral source passes along your name to a prospect who researches you online and goes to your website and social media pages to verify your credentials. All these touchpoints are crucial in getting business. One meeting is rarely enough.

5. Capture all costs. Marketing encompasses a wide array of potential costs, including:

• Networking (membership dues, event registration fees, travel, entertainment, etc.)

• Outsourcing (content writers, graphic artists, website designers, videographers, consultants and agencies)
• Software and tools (purchasing and maintaining CRM systems and marketing tools)
• Printing (firm brochures, business cards, folders, etc.)
• Advertising (online, radio, television and print ads; sponsorships; promotional items)
• Salaries/Internal time (time spent on marketing activities).

Note that you should also account for how you spend your time. Time is money. Avoid doing tasks that could be delegated to another person who can work more cost-effectively than you.

6. Consider the stage of your business. If your firm is new, you’ll need to invest more money to establish and build awareness of your brand. As you grow, you’ll want to expand your marketing efforts and develop relationships to generate leads. Established firms should focus on leveraging existing relationships and closing the gaps in their marketing to ensure they stay competitive.

7. Have some unallocated money set aside. No matter how well you plan, you may want to make changes to your budget throughout the year. Maybe you want to take advantage of some unexpected opportunities, or you need to counteract some negative business developments. Set aside some portion (10%-15%) of your marketing budget for unplanned expenses.

8. Track results and make changes as needed. If you see better returns from some strategies over others, revise and reallocate your budget accordingly during the year. There are tools to measure website traffic, advertising, social media, email, phone calls and other marketing to ensure you base your decisions on real data.

When determining your budget, remember that marketing is an investment in your business rather than just another expense. There is no typical marketing budget for a small firm. Start your year off right with a budget that is tailored to your needs and goals.

If you need assistance with your marketing, contact us for a consultation.

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.