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The minute Math shows up at a party, the music stops and everyone looks around, wondering “Who in the hell invited her?” I’m not inherently gifted with a math gene, because God knew I would be too powerful if I could conquer algebra. But, as a microbusiness owner, I’ve had to make nice with math. And Math is where we go to figure out the marketing budget. Yay, math!
But, before we get to the math, let’s have a little #BestieRealTalk on money and marketing.
When we spend money on our business, it is an INVESTMENT. Yes, it’s an expense, but more importantly, it’s an investment. The money you spend marketing your microbusiness is an investment to support your sales efforts. When you use your marketing budget, you’re not throwing money away, you are spending money to make money.
Okay, cool, so what’s the right marketing budget?
Ready for the one-size-fits-all magic number?
Yeah, there isn’t one. There is no one universally-accepted number. In fact, according to The CMO Study© for 2020 the range for marketing budgets from 4% for energy to 24% for consumer packaged goods.
Percentage of what? I thought you’d never ask.
Determining your marketing budget, an operating expense of your microbusiness, starts by reviewing your annual revenue goal. You know, the money you project to bring in for the year. Once you’ve set your revenue goal, you can identify a starting point for your marketing initiatives. A good starting point is 10% of your annual revenue.
If your revenue goal is $100,000, your starting point would be $10,000.
That number is simply a starting point. With that number in mind, the shoestring marketer focuses on how to leverage a smaller budget into a greater reach. How can we suck as much value possible from the lowest amount possible and still achieve our revenue goals?
Once you’re done, that percentage may become 7% or 11%. There is no one right answer.
But there absolutely is a wrong answer. $0. You cannot effectively market your business sustainably for free-fifty-free. You just can’t do it. Yes, there are a lot of free resources you can utilize in your marketing efforts, but relying exclusively on free resources to fuel your sales engine is no different than trying to gas up an airplane with tap water.
What do I need to achieve my goals?
Marketing exists to support sales, so once you’ve determined your starting point, it’s time to get clear and creative on what resources you need to achieve your annual revenue goal.
Your marketing budget covers more than ads.
You marketing budget includes all the costs of attracting prospects to your microbusiness. The cost of any activity designed to bring in potential customers is covered by that budget, and is found in one of three areas:
There has never been a better time to outsource projects and tasks. You can hire specialists to handle just about any marketing task you can think of. I personally utilize VA’s to manage Pinterest and YouTube.
- Got a website?
- Using a scheduler for your social media posts?
- Sending out an email newsletter to your customers?
- Using a web-based graphic design program to create your graphics?
- Got a third-party platform you use to create and schedule live broadcasts?
- Signed up for a stock photo or graphics membership?
Those are all marketing tools or resources.
Yes, this includes running ads, but this also includes networking groups, directory listings, trade show or vendor booth fees, signage, printed materials like a brochure, and promotional items that you give away.
The Bottom Line
To create your marketing budget, start by determining your sales goals and use 10% of the projected revenue as your starting point. Then, identify the cost of the people, resources/tools and paid opportunities that will help you achieve your sales goals. Finally, look for ways to decrease that number without impacting your sales. If you determined you needed $2000 for a VA to edit videos, could you achieve the same outcome for $1500 and still meet your sales goals?
After creating marketing budgets for 20-years, my process is:
- Identify the starting point.
- Make a giant wish list of all the marketing expenses I would include if I had an unlimited budget, with justification for why they are necessary.
- Step away from the process for at least a day to let my excitement die down.
- Come back wearing my CFO hat, red pen in hand, and work towards getting that number down, without compromising the outcome, by focusing on the eight marketing strategies that can be implemented on the cheap.
Depending on where your microbusiness is on its journey will impact your budget needs. If you are just starting out, your marketing budget will be higher because you’re starting from point zero. You have no following, no presence, no customers, no leads, no brand identity, no awareness. But, if you’ve been in business for a few years, your budgetary needs may be smaller, since you already have a presence, awareness in the marketplace, and customers and prospects.