In order for small businesses to thrive, their marketing effort must strive to connect with consumers in a meaningful way. However, given the tight profit margins startups operate under, they must be very careful in allocating resources to their outreach efforts. To maximize visibility and profitability, founders should contemplate three factors when creating a marketing budget.
Long-term financial outlook
Before creating a marketing budget, founders need to have a handle on their company’s long-term financial outlook. As this Forbes piece points out, it’s impossible to say how much capital should be allocated toward marketing without understanding how much profit a startup is generating. After creating an annual net income forecast, an owner should follow the U.S. Small Business Administration’s advice and dedicate seven to eight percent of their firm’s revenue to their marketing efforts. Without this information, businesses run the risk of creating marketing campaigns that don’t have enough funding to meet their objectives.
Another key consideration that should be made when creating marketing budget is to have a clear set of objectives. This means establishing at least one year’s worth of benchmarks for lead generation, sales, email subscribers and social media followers. These benchmarks should also be attached to specific return on investment goals. While it can be difficult to quantify the impact of print and television advertising, the effect of various email and social media campaigns can be analyzed in detail. Customer relationship management software allows owners to see exactly how consumers interact with specific ads presented through a range of channels. Without having clear goals for its outreach efforts, a company can’t create a viable marketing budget.READ MORE: Michigan Senate Blocks Gun Storage Vote
Marketing and branding
While the two terms are often used interchangeably, there is a difference between marketing and brand building. Marketing refers to the promotion of a company’s offerings. A small business’s marketing efforts should be focused on promoting new and existing products and services, sales, special events, etc. On the other hand, branding is the promotion of a company’s message to consumers, core values and unique characteristics. A burgeoning enterprise’s branding efforts should be focused on boosting business’s visibility within the marketplace, not specific products or services. As such, founders need to structure their marketing budgets so that they account for both fixed brand building costs and variable marketing expenses.
By considering their financial situation, objectives and brand building concerns, small business owners can create marketing budgets that prioritizes profitability and awareness.
This article was written by Mario McKellop for CBS Small Business Pulse