Tips For Small Business To Create A Marketing Budget

Big businesses normally set aside a hefty marketing budget to grow their customers and client budget. Most of the marketing budgets fund billboards, show advertisements in magazines and television and do social media marketing. However, small businesses do not have the liberty to spend a massive sum of money on their marketing.

Therefore, they are more critical of their marketing budget. To ensure a good return on investment on the marketing budget, it is crucial to have a good marketing strategy. Here is how small businesses can create a marketing budget that fetches high returns.

Tips For Small Business To Create A Marketing Budget

1. Analyze The Current Marketing Budget

If your small business is already investing in marketing, you should begin with an analysis of it. For instance, if you are a company working on a niche such as Lottery Sambad, running a marketing campaign for Bodoland Lottery on a cosmetics website makes no sense. Even though marketing strategy and budget are two different aspects, they should align together to fetch the best return.

Audit the marketing budget that you are spending on a monthly, quarterly, and yearly basis. Then, carry out a segmentation. The evaluation of the efficacy of the marketing strategy should follow this step. You should reduce expenses if you notice any negative ROI or stagnant growth.

2. Start With A Small Budget

If you are starting with your small business’s marketing, consider only setting a small budget. The small marketing budget will allow you to run a pilot in a risk-free manner. Only after you have identified the best marketing strategy for your business should you go forward with a hefty investment in marketing campaigns.

3. Set Goals and Measure Results

Now that you have set a marketing budget, you should figure out what you plan to achieve through your marketing strategy. It can be anything from generating and converting leads to increasing the number of followers or revenue of your company.

Keep the goals measurable so you can easily track the result. With the analysis of the result, you will have enough data to see whether a marketing campaign was a success or failure. Based on the positive and negative ROI, you can then work towards modifying your marketing budget, if required.

4. Consider Other Aspects In Detail

The marketing budget can have a ripple effect on different aspects of the business, which requires to be considered. For instance, you might have to pay cash upfront if you plan to run a marketing initiative with a long lead time. In other words, the money you spend on the marketing campaign will probably reap results next year. Therefore, it can affect the cash flow of the business. Hence, before setting aside any money for the marketing budget, consider other critical aspects of the company too.

How Much Should You Set Aside For a Marketing Budget?

The amount of money you should set aside for marketing depends upon a wide variety of factors, such as the products and services you are dealing with, the number of employees in the company, and the sales revenue. Generally, companies dealing with B2B products and services allocate 11.3% of the total budget to marketing. On the other hand, companies providing B2C products and services spend nearly 13.9%-15% of their revenue on running marketing campaigns.

If a business generates less than $25 million in revenue, spending 53% of the budget is expected. On the other hand, big companies with revenue of more than $10 billion or more spend merely 10% of their budget on marketing. However, even though the percentage of their marketing budget is small, the amount of money they invest in marketing is high.

The number of employees in a company also affects the marketing budget. The current trend indicates that companies with less than 100 employees spend 46% of their budget on marketing. Companies with 1,000 to 2,499 employees spend 9% of their budget on marketing.

Primarily, not one but many criteria determine the marketing budget of a business, and it is usually different for different companies. To identify the proper market budget, small businesses should start by finding out more about their customer base and identifying the platforms where they should put their marketing efforts. Then, finally, everything narrows down to experimentation and evaluation.