As a business lender, we see first-hand how a business owner's approach towards marketing can directly impact their overall business health.
When it comes to budgeting, many small business owners plan what to spend on everything else first, leaving the leftovers (if any) for marketing efforts. That's a plan that can backfire in two significant ways:
Missed Opportunities - if you aren't getting your name out there, and your competition is, who will your potential customers contact?
Misunderstandings - having no marketing plan can lead to rush decisions when a marketing opportunity does arrive. Without a clear plan, however, it's unlikely your expectations will match the marketing outlets deliverables.
So how do you determine your marketing budget? Once you do, how do you spend it wisely?
Setting Your Marketing Budget
The Small Business Administration reportedly advocates that companies with less than $5M in annual revenue spend between 7 and 8 percent of their revenue on marketing.
Research by marketing gurus at Gartner Research back this up - respondents to their recent marketing survey report 2014 marketing spending of less than 10% of revenue. Interestingly, over 50% plan to increase their spending in 2015.
Image Source: Gartner Research
When setting your business' marketing budget, keep in mind your particular industry and your competition. Highly competitive industries (consumer services like carpet cleaning, home repairs, restaurants) may need to "dial up" their marketing spending to grab their share of the market.
Spending Wisely
"To be successful and grow your business and revenues, you must match the way you market your products with the way your prospects learn about and shop for your products." ~ Brian Halligan, CEO, HubSpot
Once you determine your budget, it's time to look for ideas that will help you stand out. Look for marketing that you can measure so you can readily see it's effectiveness - multi-million dollar TV ads are great for creating brand-awareness by getting people to talk about Pepsi and Tostitos, but it's impossible to know how much that directly impacts next week's grocery lists.
Here are some great, cost-effective ideas we've heard from our customers:
- Carpet Cleaner: Gives Referral Bonuses to existing customers for referring him business (tip: give store gift cards or cash versus discounts off your services or you'll dilute the customer's perceived value of your service.)
- Plumber: Places eye-catching, removable refrigerator magnets directly on the outside of his service vehicle whenever he parks at grocery stores, hardware stores, or any place he's likely to encounter potential customers. His potential customers can literally grab his name off his truck!
- Graphics Designer: Places business cards asking "need a wrap?" whenever he sees a plain white cargo van or box truck.
- Restoration Company: Gives 10% referral to local plumbers who send him their customers.
- Local Craft Brewery: Allows his tap room to be reserved for charity and political meetings and fundraisers.
With careful planning and a commitment to staying within budget, your marketing efforts will strengthen your business' bottom line by measurably increasing your revenue. And you didn't have to spend $4.5 million to get there.
Enjoy Sunday's game!