Tweet

Setting a Marketing Budget

Written by: Scott C. Margenau

Article Overview: One of the most important decisions that a small to medium-sized business has to make is how much money to spend on a marketing budget.

Setting a Marketing Budget

Setting a Marketing Budget that will make a market impact and generate sales. One of the most important decisions that a small to medium-sized business has to make is how much money to spend on a marketing budget. Prospects often ask, "How much should I spend on marketing?"

The answer: "It varies by industry and business size." It is also based on how much you want to grow, and how fast. Both SCORE and USSBA define the variable for a proper marketing budget to be between 2% and 10% of sales, noting that for B2C, retail and pharmaceuticals can exceed 20% during peak brand-building years.

Most companies under-spend on their budgets, thinking that not to spend is to save. This, quite simply, isn't true. You've heard it before, and it bears repeating - you have to spend money to make money. The trick is to spend your money wisely on a tailored marketing plan aimed at fulfilling your company's goals. Keep in mind that your marketing efforts are directly correlated with your revenue, so now is not the time to be penny foolish.

Budget-Setting Guidelines

There are two main things to consider when setting a marketing budget:

• The Custom Web design development or refinement of the brand and channels used to promote the brand. These include logos, Web sites, blogs, email campaigns, sales presentations, brochures, ads, etc.

• The ongoing expense of promoting and advertising your brand to your customer base.

For most small to medium-sized businesses, the percentage of revenue dedicated to a marketing budget is determined by industry and size. Below is a chart showing what we have put together based on several creditable sources.

Here's an important consideration: (Adjust for Industry!)

Every industry is different, so companies that sell to specific government branches or one that has an ultra-specialized niche may be able to deduct 1-2% from the above figures. If your company is B2B or B2C, you may need to raise your budget by 1-3% to see solid results. Retail and pharmaceuticals lead the spending, with many of these companies spending more than 20% of net sales. Overall average is reported as 4-6%. Many other circumstances will merit an increase or reduction in your marketing budget as a percentage of revenue. Feel free to contact us to discuss this, or visit

Here is a great quote from SCORE: "Often, small businesses estimate their sales revenue, cost-of-goods, overhead and salaries, and then gross profit. Anything left is considered available funds for marketing support. That's not such a good idea.

If you are the new competitor in the marketplace , you will have to spend more aggressively to establish your market share objective.

Can I still grow my company with "baby steps"?

Sure. We call this organic growth, and it is how nearly every business starts off. Remember washing cars or mowing lawns for a few bucks? Next thing you know, your neighbor wants it done. That neighbor refers you to another neighbor, and so on. Many businesses grow their clientele on word of mouth alone, and are very successful. But they usually hit a brick wall. That's where building a solid branding campaign helps. To rely on partial branding or organic growth alone, you risk losing revenue from business you did not get because X% never discovered you or did not have their interest piqued when they interacted with your brand. Nor can you account for lost revenue from those who perceived your current brand negatively and left your site without you ever knowing it. This is why it is so important to build the brand correctly. Why risk millions to save thousands?

Why do so many small and medium-sized businesses fail?

One reason is that companies do not allocate enough money for marketing. Successful and highly profitable small and medium businesses (SMBs) know how to allocate adequate funding to marketing each year. SMBs realize that marketing, if done properly, brings back solid returns and vice versa-whereas not allocating enough in your budget for marketing could spell disaster. Think of marketing this way: It is a fundamental ingredient for profitability and growth.

Ther are many Web Design Company that will help you put together a marketing budget that will help your maximize.

Related Articles
  The Top Business Best Practice
  Effective low budget internet marketing strategies
  Squeeze Maximum Results from Your Marketing Budget
  How to Spend Your Marketing Money
  How To Set Up Your Budget for Marketing

Article Tags: bud, budgets, business size, custom web design, customer base, email campaigns, government branches, important decisions, logos web, market impact, marketing budget, marketing efforts, marketing plan, medium sized business, medium sized businesses, niche, pharmaceuticals, refinement, sales presentations, web design development



Related Forum Posts
Re: MLM Marketing, youtube, and buzzirk mobile. - I have experience with MLM too. My initial reaction to the business was "snake-oil salesman" but once I got to understand the "overall business model" I am now an advocate to it. MLM (Multi-Level Marketing) is also known as Network Marketing. I realized an MLM business is no different than any other business. One needs to focus on both words "Network" and "Marketing" and give both equal respect. Some people focus heavily on the Networking part but forget "Marketing". I've started to use Building on a Budget and Magnetic Sponsoring concepts in my NM business and have found that people don't get involved so much because of the product but more because of what you bring to the table as far as marketing systems and support. I have both products listed in my signature. you don't have to buy it as the link to the free videos itself provides you a good understanding of what is required to position yourself as my above paragraph. If you do plan on purchasing it I can tell you that the measly $40 will open your eyes BUT your upline will not be too happy (atleast in the short term) beacuse the system is not duplicateable. I wrote this post as a polar post to Bulmer's reply as I have exhausted the friends and family networking and realized i never really focused on marketing. My leads now are more qualified and open to hearing about my opportunity than the other way around. my 2 cents if you plan on growing an MLM or Networking Marketing business.
Re: What is your Business? - We are running a Online Marketing Firm and we have some good clients to which we are offering a complete Digital Marketing strategy like Search, Mobile Marketing, Branding and Design. I think in Online Marketing company online presence can be a wining factor for the success of the company.
Re: How do you monitor what people say about you in the web? - Setting up Google alerts for your keywords can give updates about your site. Also the publicity you create in the social media sites will do help too
Re: Let’s talk about the ways of marketing your products, servic - I agree with some of the others who responded it depends on what your selling... but to answer your questions here are some of the methods I use. Forum Marketing Yahoo Answers (I need to use more of) SEO (Search Engine Optimization) Bum Marketing or Article marketing P-P-C (Pay Per Click) Marketing Online Directories Hope this helps.
Re: What is Your Favorite Thing About Owning A Business? - 1. Not feeling like I have to get approval for anything. 2. Not feeling like I have to please anyone. 3. Not having to ask permission before I do something. 4. Setting my own hours. 5. Sounding really cool when I tell people I have my own business.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Five Daily Marketing Habits to Increase Sales

Soda Vending Machine = Energy Hog

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.