Drafting the right Marketing Budget

What we all can entirely agree on is that having a good marketing plan alone isn’t enough to propel a business to a new global frontier. However, a good marketing plan that’s backed up by a bespoke marketing budget is all that’s needed to spur business growth.

A good marketing budget is capable of catalyzing your marketing model by providing your business the marketing push that’s needed to deliver an authentic & trusted marketing message while making your business offering and value proposition alluring to your clientele.

Being able to determine how much money to devote to marketing is one of the first steps in achieving success in your business. Knowing exactly the right amount of money to allocate to marketing each fiscal year to get an optimum result without running into deficit or excess spending is something many business owners still struggle to unravel. The genesis of this problem lies within the unanswered question of ‘HOW,’ ‘WHERE,’ and ‘WHEN’ to spend a marketing budget.

This quick guide will walk you through the necessary things you must pay attention to enable you to draft an appropriate budget for your business marketing need.

Research Your Market & Understand The Market Trends

To remain attuned to the changes in the market and to understand the best strategy to adopt in allocating money to marketing, it’s important to always observe market trend and compare your business with other businesses in your industry because the stability of consumer behavior is dynamic. Since you won’t be given prior notification each time marketing budgets across many economic sectors rise and fall you need to consistently research your market to remain competitive and to know when to go back to your drawing board.

Whether your target market is old demographics that prefer traditional shopping to online shopping or millennials that spend half of their day on Instagram, you still need to carry out in-depth market research to understand regular changes, buying pattern, and other new market trends in your business. Once you’ve been able to figure this out, you’ll be able to build good marketing and sales funnel for your business.

You Must Have A Marketing Plan & A Marketing Objective

Every business deserves to have a written marketing plan and a clear marketing objective(s); this is a significant component of a complete business plan. The advantage of having a business plan cannot be overemphasized. Get a bespoke business plan written for you if you don’t know how to write one. Having an idea of your market trend and changes will enable you to develop a good marketing plan. You should also be able to clearly state your marketing objectives/goals you want to achieve in your business each fiscal year. Having a clear marketing objective will enable you to determine:

• The kind of marketing style to apply
• How aggressive your marketing campaign should be
• More importantly, the amount to spend to achieve your marketing objective(s).

Please keep in mind that your business plan and marketing plans are not a set it and forget it. Your marketing plan and business plan need to be reviewed and updated as your business grows.

Always Monitor Your Market Competitors

Once you know your competitors, a strategy becomes more natural to craft! And this can be done by finding out how much your core competitors are spending and to use the same approach in a more better & efficient way to market your business. This method might seem hard because no company will be willing to share its strategy with a competitor. However, if you’re able to discover their information and approach, then this method can be a great way to figure out how much to spend on marketing.

It’s also important to factor the number of years a company has been in existence before using this strategy. You can’t use this strategy to compare a new business and Amazon.com

What Is Your Revenue Percentage?

Ideally, your marketing budget should be determined by the nature of your business and the average income your business generates each fiscal year. Economists suggested that new companies should commit 12% -20% of their revenue into marketing. On the other hand, the U.S Small Business Association indicated that only companies whose net income percentage is above 10%-12% should utilize the above percentage method in determining their marketing budget. Older business tends to use 6% – 12% of its gross revenue for marketing.

New start-up companies should base the percentage they wish to spend on marketing by the amount of their working capital because they aren’t sure yet what their income will be at the end of their 1st fiscal year.

Calculating Cost of Marketing And Sales Per Product

Another way to determine your marketing budget is to estimate the cost per each sales unit sold. For example, a food truck shop might need an average of $7 dollars of marketing and sales expenses to sell a product to one customer per hour. If the food truck company plans on selling their goods to 10,000s customers in 2019, then the marketing and sales budget should be $70,000 in 2019.

As always let us know what you think in the comments below.