As a small business owner, there are many different sides that you likely manage while operating your business. Expenses, sales, branding—there’s clearly more to running a business than meets the eye. And in 2021, you’re looking to expand and grow your business, and you know that marketing plays a big part in achieving those goals. However, you may have one important question on your mind: how much should you budget for marketing?
Well, there isn’t an easy, one-size-fits-all answer to this question. Your competitors likely run on varying marketing budgets that are largely based on their individual industry and revenue. Of course, you don’t have time to figure out what everyone else is doing with their marketing budget and spending. For your business to grow, you need exceptional marketing efforts that drive your target customers to your brand.
This is easier said than done. To achieve tangible, accurate results that work towards your success, you need to invest. In this blog, we’ll break down how much of your budget you should allocate towards marketing.
What to consider first with your marketing budget
Most businesses provide a percentage of their actual or project gross revenue towards marketing. Depending on your individual objectives, you should always take baby steps when it comes to budget allocation. At CreativeCore, we recommend preparing to invest around 10% of your annual revenue on a complete marketing strategy.
Key factors to consider include:
- Different marketing channels. The marketing budget should be split between brand development and business promotion costs. Marketing comes with different facets, including the channels in which you (or your marketing team) promote your brand, services, and promotional materials, and so, your marketing budget should accommodate these costs. Each part outlines the costs that will go into the methods and channels used for these brand promotions and other materials.
- Your business industry, size, and growth. Different industries, business sizes, and growth call for a different percentage in marketing budgets. A small business belonging to the healthcare industry, for instance, will use a larger percentage of their revenue for marketing than that of an established business in the retail industry.
- Business margins for expenses. Having margins lower than 10-12 percent means you must lower your overall margins and focus your allocation (additional spending) on marketing. Marketing should never be left last after all other business expenses have been paid off.
The downside of cookie-cutter marketing
Depending on your industry and audience, there are many marketing agencies out there that are willing to manage your marketing so that you can focus on your business. Unfortunately, the effectiveness and efficiency of each marketing agency vary. Some agencies will leverage different facets of marketing that do not pertain to your business and marketing needs. This usually happens when an agency isn’t tailoring to your brand or audience specifically.
Because these agencies have many clients under their belt, they do not have time to learn about your business’s specific needs. They may briefly glance at your business’s brand identity and provide a shallow, one-size-fits-all approach to marketing. If your competitors have a team of marketing experts who specialize in marketing research, advertising, SEO, social media, email marketing, and the like, it’s safe to assume that they’ll surpass you in numerous ways.
Additionally, you may feel tempted to run your own marketing or have one person handle your marketing efforts. The problem with this method is clear-cut: what happens when you or your designated marketer are not available? Will you have time to work on email marketing, social media marketing, and ad campaigns while also dealing with your regular business operations? All of these factors can force you to miss deadlines and push back on projects, client meetings, and other important business-related tasks.
To choose an effective marketing agency, be sure to ask the following questions that bring value to your business:
- Who are your previous clients?
- How many other clients are you currently working with?
- Can you provide me with the results of your marketing efforts?
- How do you typically measure your success?
- What marketing tools or software do you use?
Cheaper marketing services are a bad ingredient to the success of any business. It usually leads to wasted time, money, and little to no return on investment. To accomplish the best results from marketing efforts, you will need to invest. Remember: marketing is a necessity when it comes to business growth. Products and services don’t sell themselves. By having innovative marketing strategies from a team of marketing professionals, you will continue to build positive brand equity, which leads to higher sales and customer loyalty.
At CreativeCore, we take the time to learn your brand inside and out so that we can deliver marketing strategies that fit the needs of your company. Book a meeting with us to learn more about how we can help you work within your budget and surpass your business goals.