3 Questions to Ask While Making Your Small Business Marketing Budget
First quarter has flown by this year. Did you make the most of it? Many companies evaluate their budget on an annual or quarterly basis based upon the last period’s experiences. But that means if you fell flat, you’re likely to sell yourself short again next period, which can become a feedback loop that will leave you frustrated and confused.
Past performance should absolutely remain an indicator of how you create a budget for your small business marketing needs, but we suggest you take a larger look at your goals and expectations as well to make sure you set yourself up for success. Here are three questions you should be asking before finalizing your marketing budget.
Where are we now?
Yes, this should be a conversation with yourself about how much has been spent on marketing in the past, but it should also speak to the larger financial climate for your business. Are you overbooked and having to turn clients away? Maybe some of your marketing budget can be used to alleviate that stress. Overmarketing your business won’t create great experiences for your clients. Or maybe you’ve found your business’ public brand perception doesn’t match your internal conversations. That may indicate it is time to set aside some extra attention and conduct a brand audit to ensure future sales.
How much do we want to grow?
Simply put, the more you set aside to reach out to new audiences, the more likely you are to capture them. You can’t catch many fish with a small net.
- A lean marketing plan should consist of approximately 1-2% of your top line revenue, and you should commit to retaining current customers with low cost options. This is ideal for companies that are looking to maintain their market position. No ambitious growth goals here.
- A middling marketing plan should cost 3-4% of your top line revenue. This can both retain existing customers and reach out to prospective clients with more advanced tools and strategies, and its effect on annual growth can be upwards of 15%.
- A stretch marketing plan is considered 5% or more of your small business’ top line revenue. The more resources you apply to complex strategy and bleeding-edge technology can exponentially increase your ability to obtain new leads, conversions and sales. Depending upon your input, you can expect 20% or more in annual growth.
What do we want to accomplish?
Consider your marketing goals for the year. It’s possible you have very specific ones such as building a new website or starting a podcast. These kinds of goals should be discussed with your marketing team in advance to price out your allotment for the upcoming period before finalizing the budget. The key is to take a balanced approach and be fully informed on how to meet your marketing goals.
Taking the time to look at a fuller picture of your small business’ marketing needs can help you choose a budget that will accomplish what you need while managing expectations for growth. What other considerations do you take while creating your marketing budget? Let us know in the comments down below.