Setting a marketing budget is a task that can become particularly arduous for a small business. We always tend to determine the marketing budget based on “what’s left over” from the profits, and yet this expense is absolutely vital for a growing business. If you have ambitious growth objectives, it’s better to plan for a forecast that will let you boost your sales while remaining within reasonable limits with regard to your size and your revenue. Here, we’ll help you effectively and profitably determine a marketing budget that lives up to your ambitions!
The first thing to define when it comes to the marketing budget is obviously the budget! Without getting into the detailed calculations, there are several criteria that must be considered to determine a budget that’s relevant to your business.
- First, you should determine within which strategic issues you’re going to develop this budget. If your business has ambitious goals in terms of its growth, it will be necessary to establish a budget that’s larger than – for example – that of the previous year. Obviously, the budget will be less than if you’re just starting your business or if you’re launching a new product, but we can easily estimate a marketing budget of around 10 to 15% of the income for a growing business, compared to 2 to 5% for well-established companies in their field.
- You should, therefore, consider not only your goals but also your market and your place within it. The budget should correspond to the size of your business, to your sector, and to your customers. If your traffic area is rather restricted, since it primarily concerns professionals in a given area, you’ll have a budget lower than that of a company aimed at individuals throughout the territory.
- Another criterion to analyze is that of the competition. What are your competitors doing? Are they resting on their laurels or do they tend to adopt very aggressive marketing strategies? What is your place within this market?
If the budget in and of itself is an important part to determine, the marketing budget should also be established based on the time that you’ll spend on its exploitation, but also on actions that you can carry out regularly throughout the year. That’s why the business plan goes hand in hand with the marketing budget since determining the budget itself isn’t enough. The worst mistake you could make is to wait until the last minute to concern yourself with the launch of a product that it took months to develop, only to finally implement communication activities in a rush, with inadequate or very costly service providers or strategies!
On the contrary, you have to take the marketing budget seriously and see it as an investment in its own right, since it’s responsible for your sales. Within the context of a company with growth objectives, it’s necessary to optimize all the steps in the marketing budget and plan: it’s best to prioritize well-crafted actions over others that haven’t been thought through. To do this, you can consult the articles on this blog: our team members give you the basics to know to optimize each action that you consider relevant to your business.
Generally, in a marketing budget for a growing company, it’s best to prioritize medium and long-term objectives and devote at least 60% of your budget to them. When it comes to web marketing, this includes:
- Your SEO strategy – in particular, optimizing your homepage and your AdWords campaigns. This part is essential for generating valuable visibility on search engines, and it lets you closely manage your ROI.
- Content creation. For a growing SME, one of the keys to acquiring contacts, especially online, is to offer content that’s relevant to your prospective customers, whether in the form of a blog or a presence on social networks, for example, or on YouTube, with the creation of videos related to your field of expertise. Content is truly a winning strategy for achieving your growth objectives; it’s also a time-saver (or a money saver, if you outsource this part) that
- Your local reputation, especially if your business is based on a neighborhood store. Marketing mix actions are very profitable in this case.
All these actions will not only be able to generate leads but will also enhance your brand image and your overall visibility.
Devote the remainder of your budget to more temporary or one-time actions, such as Facebook contests, AdSense campaigns, or organizing events or trade shows. You can draw on case studies to evaluate the most rewarding actions in terms of their expense-return ratio.
Don’t hesitate to devote some of your budget to monitoring and studying the results of the actions carried out and calculating their ROI, or even readjusting some of them – for example, redesigning your homepage or website. Too few growing businesses consider this “relief” budget, which can prove very useful in transforming a campaign with a mediocre ROI into a very profitable action.
3. Flexibility and adaptation
The most important thing for a growing company is anticipation! First, anticipate having the human resources to manage the impacts of your actions and to avoid creating customer dissatisfaction, which could be bad for publicity!
Don’t hesitate to imagine different scenarios to determine your priorities. Ask yourself what the best and worst scenarios for each of your investments would be to prepare yourself not only for potential failures but also for future successes.
Take advantage of your size and flexibility as an SME to readjust your actions, if necessary; this will be your strength against competitors who are too slow to respond to new opportunities!
And above all, don’t forget that not giving enough time and money to your marketing budget means entering into a vicious circle: the lower the budget is, the lower your sales will be, and the less communication you can do. The marketing budget should be an essential element in your growth strategy.