Marketing is perhaps the most important function of any small business. After all, even the best providers of products and services have no chance of survival if nobody knows they exist. Despite this, the vast majority of small businesses have no marketing budget. This not only diminishes the ability of a company to advertise its products and services, but it leaves them woefully ill-equipped to respond to changes in the ways people seek out information. Below are just two areas we see small businesses struggle in when trying to come up with a marketing budget.
1: Thinking, “I Don’t Have the Money for Marketing”
There are many reasons to have a marketing budget, but there are also plenty of reasons why marketing budgets don’t come to fruition. The main reason is that there’s simply not enough revenue to go around in many small businesses. A small business that’s barely able to keep the lights on can’t afford to set aside a percentage of its revenues for marketing. There are always more immediate financial concerns at hand. Furthermore, with the advent of social media marketing, it’s all too easy to ask an already overworked employee to handle the company’s Facebook page. The company considers this free marketing, even if it results in an employee being spread even more thin, not to mention a half-hearted social media presence that alienates potential customers.
This brings about the other major factor in the widespread absence of marketing budgets in small businesses. It’s very difficult for many businesses to calculate the return on their marketing investment. No company wants to dump thousands of dollars into a marketing plan when they don’t really understand how much (or how little) that marketing is affecting the flow of business. Owners are likely to assume that money is better spent on more tangible investments in the business. What they don’t realize is that the lack of proactive marketing action can be highly damaging to the business. This is why it is so important to budget and know exactly what you can spend. In today’s world, a little can go a long way – especially when there is a consistent, long-term strategy.
2: Understanding the Opportunities
As important as it is to have a marketing budget, it’s just as important to understand the opportunities you’ll miss out on by not preparing a marketing budget for 2017. The marketing landscape is constantly changing, which places a tremendous burden on businesses that want to get noticed. As a small business, you need to be flexible to the changing marketing climate so that you can jump on trends as they emerge. For example, you wouldn’t want to be tied exclusively to print catalogs in an era where people are more connected to the Internet than ever. Having a budget means that you can plan ahead for the future, and even if you have to deviate from your strategy in order to reach modern audiences, you can do so with the knowledge that you have the financial means to do so.
Now, imagine a scenario in which you have no marketing budget. Not only are you unable to respond to these changes, but because you haven’t planned ahead, you essentially have to pay for each marketing action out of pocket. This means that valuable resources are being taken away from necessary functions in order to fund a marketing effort that you haven’t carefully crafted. It’s not hard to see how this can backfire in a major way. What’s more, as this scenario repeats itself, you’ll place less of a priority on your marketing, making it that much easier for a competing company to gain market share.
Therefore, your best bet is to create a marketing budget and devote the necessary funds to exposing your brand to the people that are most likely to favorably react to your message. Failure to do so puts the future of your company at serious risk.
Creating Your 2017 Marketing Budget
It’s hard for any business to find the money necessary to budget for their marketing, especially a small business. But the good news is that it doesn’t have to be a major financial burden. The United States Small Business Administration states that small businesses – companies with less than $5 million of annual revenue – should invest seven to ten percent of their revenues into marketing. To start, you may wish to stay at the low end of this figure and ramp up your marketing investment if it proves successful. If you can’t manage seven percent at first, start with whatever you can and aim to move up to seven percent over time.
Once you know how much you’re going to invest in your 2017 marketing, you can then allocate your funds to various marketing avenues. Forrester Research states that the average company invests 30 percent of their marketing budget into online marketing endeavors. This typically includes paid search marketing, social media marketing, and mobile-based advertising. According to Econsultancy, the best online mediums to maximize your return on investment are social media, mobile marketing, and online-based display advertising.
You can and should also invest in offline marketing initiatives as well. Direct marketing has seen a rise in terms of effectiveness and ROI, particularly as people receive fewer mail items in the average day. Note that direct marketing doesn’t have to be separate from digital marketing. For instance, you can send direct mail pieces that lead directly to your website, where recipients can fill out forms and make purchases.
It’s also a good idea to set aside funds for expenditures that might not seem like marketing, but function as such. Sponsoring a local youth baseball team or appearing at community events might seem like money pits with no underlying budget, but when the money for these marketing tactics has already been set aside, they become far easier to stomach. This local touch will help bring your company closer to the community, which is vital for any small business.
Having a marketing budget allows you the power to implement the kind of advertising you need, to see the true return on your marketing investment, and to have the flexibility you need to appeal to new customers. To learn more about how a budget is essential in the digital age, contact HIP Creative today.