The marketing department is often the first to receive budget cuts (or even a small budget) in a small company. In fact, many small business owners make the mistake of leaving out a marketing budget when they are starting their company or introducing new products or services. The problem with the latter mistake is that without a marketing budget, small companies aren’t able to tell current and future customers about their great new products or services. Unfortunately, if people don’t know about a product or service then they can’t purchase it.
Improving ROI With A Marketing Budget
Whether you are starting a new company or introducing new products and services, the following guide will help you to allocate the funds needed to successfully market your wares to an interested audience.
Step #1: Organize Financial Information — Before you can create a marketing budget you must have a clear understanding of your company’s financials. This means that you can’t work around estimates. Instead, you must work with accurate revenue and spending numbers. Begin by calculating your “reliable revenue,” aka the minimum amount of money that your company is guaranteed to make each month. Next, calculate the money that you expect to make each month. Be sure to subtract business expenses, such as office space, cost of paying employees, cost of materials, etc. One you have determined the company’s disposable income, you can decide what percentage of the money you want to spend on marketing. Keep in mind, that it is a good business practice to also set aside a portion of the income for future growth efforts and unexpected costs.
Step #2: Determine Where You Want to Spend Marketing Funds — Once you have determined the total amount of money that you are prepared to spend on marketing, you will need to decide how you want to spend this money. The three main factors that you should consider for your marketing budget include:
- The budget size;
- Your previous marketing experiences; and
- Where you can reach the right target audience.
Once you have determined the aforementioned factors you will be able to allocate funds towards specific marketing efforts. Keep in mind that while sending out a Tweet doesn’t cost anything in a traditional sense, you are paying someone a salary to create and send those tweets, which means that you need to consider this cost during the allocation of marketing funds. Finally, it is important that your chosen marketing channels reach the right target audience. Reaching the right audience can be achieved on a budget through social media, Google AdWords campaigns, online digital advertisements (including retargeting ad campaigns), email marketing, and guest blogging campaigns.
Whether you only want to market your new products or services via social media, or you are interested in devising a multi-pronged marketing plan, if you want your company to succeed, then you must allocate the funds needed to reach your target audience of future customers.