Does your business have a marketing budget in place? Do you even know where to start in determining what that budget should be? It can seem confusing, trying to set a budget for something like marketing expenses, especially if you haven’t got a full marketing plan in place. However, you can set a budget based on several other things you know about your business. Here’s how to determine what you should be spending annually on your marketing budget.
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Basically, the amount you spend on marketing should be directly related to how much you anticipate earning in gross revenue. This is good advice for any industry, but every industry has its own additional factors to consider. You’ll have to look at the industry you’re in, how much your competitors spend on their marketing, how many years you’ve been in business, and your projected growth strategy.
Newer businesses are going to need to spend more money in marketing than older, established ones. Despite any ‘suggested guidelines’ that say what percentage you should be spending, you’ll probably find that you’ll need to set aside a higher percentage of your estimated gross earnings, at least for the first couple of years. Some businesses may budget up to 20% of their estimated gross, but your business may not need that much. Or, it could require more, depending on the industry.
Bigger business tend to spend a lower percentage of their estimated gross because they have a much higher estimated revenue than smaller ones. Every business varies, depending on your size and revenue, but it’s suggested that smaller businesses with less than five million dollars in revenue should anticipate budgeting 7-8% of their estimated gross revenue for budgeting.
You can budget a huge percentage of your income for marketing, but if you don’t spend that money wisely, it won’t help your business. Make a list of the types of marketing tools you plan to use, from billboards and signs to travel for trade shows and social media marketing.
For more great tips on marketing for your business, stop by Postcard Portables today.