As a small business owner, how much should you be spending on marketing, and what specifically should you be spending it on? The answers will of course be a little different for every business owner, but there are some solid principles we should all be keeping in mind as we move ahead into the new year.
Today I’m bringing you five tips to help you plan to invest in your marketing – and it all starts with a must-do mindset change.
- Remember, marketing is an investment, not a cost.
Many small business owners and entrepreneurs categorize their marketing costs as an expense, just like anything else. But before you go any further with your budget planning, it’s time for a mindset shift!
Marketing is an investment in your business, meaning it will bring you huge returns, now and especially over time. As much as possible, don’t think of marketing as spending money, think of it as planning for your business’s growth.
- Keep track of how your prospects become customers.
Sketching out an effective marketing budget require you to track results throughout the revenue cycle of your business, from prospect all the way to customer.
You’ll be able to get this data from your marketing automation software, CRM, or you can simply commit yourself to keeping an eye on this information yourself.
As best you can, determine:
- The number of website visits you’re getting each month.
- The number of leads you’re generating each month, and the cost of getting them. For instance, website development, paid ads, your own time spent on discovery calls with these leads, etc.)
- The number of these leads that eventually become paying clients.
- The average value of a new paying client.
This information will help you make an educated guess about next year’s revenue,
- Be thorough when projecting your expenses.
This part isn’t always fun, but it’s necessary. Remember, since marketing is no longer classified in your mind as an expense (see #1, above) you can skip right over it as you tally up your other expenses. These might include:
- Subcontractors or employees.
- (Setting aside about 25-30% of your earnings for quarterly taxes in a great rule of thumb.)
Don’t forget those seemingly-small, infrequent budget items that can easy fall through the cracks when you’re planning out your budget:
- Office supplies.
- Postage and shipping.
- Food and travel expenses for client lunches and meetings.
- Membership dues for any professional associations you belong to.
- Conferences, subscriptions to industry magazines, etc.
Finally, give some thought to those “unexpected” costs that tend to pop up (often when you really wish they wouldn’t). These can really knock your budget off-kilter if you don’t plan ahead and set aside money to cover miscellaneous expenses. These expenses might include anything from a broken laptop that needs to be replaced to a big rent increase for your office space.
Remember to review your budget once a month.
- Determine your income goals.
Let’s talk dollars and cents! What are your income goals for the first quarter of 2018? How about for the year? It’s common for small businesses with revenues of less than $5 million to spend 7-8% of that amount on marketing.
How much will that be for you?
- Understand the current (and future!) trends in your industry.
When setting your marketing budget, don’t be afraid to put some funds into trying out different technologies to keep up with the changes in your industry.
For instance, is email marketing a big part of your strategy? Maybe you send out an email newsletter or even touch base with your email list on a daily basis. Make sure you’re taking advantage of email tracking, scheduling, contact insights, and more.
A marketing budget should also include investments in traditional market techniques as well as the social media platforms where your ideal clients spend time. Always have a picture of your ideal client in your mind – what form of communication is she most likely to respond to? What would you most like to say to her, and what would she most like to learn from you?
At the end of the day, any marketing budget is all about your customers and clients. As a business owner you’ll spend lots of time tallying up the dollars and sense for your marketing budget, but it will all be completely worth it when you get to reach and serve your dream clients.
Want to chat about how you can invest in your business next year with powerful traditional marketing techniques (flyers, postcards, and more), cutting-edge visuals for your website or social media, or anything in-between? Click here.