Although there are free forms of marketing out there (social media, anyone?) or you can take a DIY approach to promoting your business, it’s always a good idea to have a marketing budget in place.
There will be things that come up you’ll need to fork out for – such as business cards and flyers if you have a table at a networking event, for example. Having a budget already in place for this means you’re not scrabbling around double checking your cashflow to pay for these items at the last minute.
But I have to tell you that DIY isn’t always the best way to go. Unless you are an expert in every aspect and form of marketing from SEO to social media, copywriting to ads management; you’re going to need to hire a professional at some stage to shine the best light possible on your business.
I know that building a business from scratch is hard work and in the early days every penny counts. Making the move to paying for marketing can be a big decision but it’s the move that’ll take your business to the next level.
So, in this blog I want to discuss the different aspects of creating a marketing budget, some recommendations on how to spend a budget for best results and some other considerations to leave you with.
What is a marketing budget?
A marketing budget is an outline of all the money your business intends to spend on marketing over a set period. Your marketing budget can include various expenses from software and apps to freelancer costs, paid advertising, and website costs.
The budget you set needs to be based on your actual revenue and realistic. £500 a month for marketing is a fantastic amount but it doesn’t work if you only bring in £600 a month and have other expenses to pay!
Yes, there is an argument of speculating to accumulate but it needs to be affordable for you, and your business.
10 or 15% of profit after expenses (and your salary) are paid is a reasonable amount to set aside for marketing in the early days. As you start to market more and gain more clients, that budget should naturally increase enabling you to investigate new marketing opportunities.
Account for your fixed costs first
There are some fixed marketing costs that you’re going to have to pay each month or year. These are often the essentials of promoting your business such as your website and so you need to account for these first.
Some fixed costs for you might be:
- Domain name
- Hosting fees
- Website apps – page builder, plugins, and integrations
- Website fees – if you use Shopify, Wix or Squarespace to host your website
- CRM system
- Networking membership if you’ve signed up for a set period
Some of these may be cost of doing business if you sell through your website rather than marketing. A good rule of thumb to tell the difference is to ask yourself “do I need this to serve my customers?”. If the answer is no, which it will be for most service-based businesses, if you work from a premises/deliver services at home, etc then it’s more likely to fall into the marketing category.
Ongoing marketing expenses
The bulk of your marketing budget is going to be spent ongoing marketing expenses that focus on bringing leads to your website and customers through your door.
These costs can vary from just a few pounds a week to paying a freelancer a four-figure sum each month, and it’s these expenses that can swallow most of your budget (and cashflow) if you don’t manage them carefully.
Some examples of ongoing marketing costs include:
- Blog writing/content creation
- Physical items like business cards, pens, leaflets, etc
- Social media management
- Networking fees – food/drink allowance or non-membership events
- Subscriptions – software and apps like Dropbox, GSuite, Hootsuite, etc
- PPC ads – Google, Facebook, Pinterest, etc where you set a budget for each ad
- Banner/print ads
One-off project costs
In my experience, these costs are seldom included within a marketing budget because they’re a one-off fee, but they also tend to be the most expensive. It’s better to get quotes and save for the work in advance by allocating a part of your marketing budget to it each month or quarter, than waiting until the right financial opportunity.
These are often the most important marketing costs your business will spend, as they’re a long-term investment such as a branding/rebranding, campaign creation, search engine optimisation, annual events, etc.
One-off/per project costs to account for in your marketing budget are:
- Design costs for brand/rebrand
- Website designer/developer
- Copywriter for website/advertising campaign
- Social media optimisation campaign
- Event costs – attendance, marketing material for that event, etc.
- Marketing consultancy/strategy
How to get the best from your marketing budget
By having a strategy in place you’ll know exactly what each marketing expense is designed to do – bring in x leads each month, for example. Just like posting on social media without a clear purpose yields few results, just putting an advert on Google without a clear goal behind it is unlikely to do well.
The best way to create a strategy is to be clear on your target customer. Understanding them in terms of demographics (gender, age, etc) and psychographics (how and what they’re thinking) will ensure your marketing taps into their wants, needs and problems and so hits the right note with them first time.
Analyse your return on investment and tweak your marketing budget
Always analyse and evaluate everything you do in business but particularly where money is involved.
Are you spending £50 a month on Facebook ads but only generating £75 income where the £50 you’re spending on Pinterest is bringing in £150? Wouldn’t it better to spend your £100 PPC ad spend on Pinterest instead?
Do measure your results against the goals you set. You do have to give things a chance, some results take time, and some require trial and error. But be realistic. If your paid ads haven’t done well for three months, it’s perhaps time to try something else or to hire a copywriter/ads specialist to help you refine the message.
I hope this blog has given you an insight into the different factors you should be considering when creating a marketing budget for your business, and how strategic decisions and evaluation are key to getting the best return on your investment.
If you need help with your marketing strategy or creating a budget, do get in touch with me for a friendly consultation; I’ll be delighted to help.