One of the first steps to figuring out your marketing budget is to establish your total revenue. Talk to your CFO, financial department, or accountant and figure out your gross revenue or estimated revenue. What is Gross Revenue, it is revenue received before any deductions or allowances, as for rent, cost of goods sold, taxes, etc.
A good rule to follow for small businesses with revenues of less than $5 million is to spend 7 to 8% of revenues on marketing, with the budget split between. However, the 7 to 8% rule assumes that your business will have revenue margins of 10 to 12% after expenses, which will include your marketing budget.
For companies that have been in business for one to five years, it is suggested to use 12 to 20 percent of your gross revenue or projected revenue on marketing. Companies less than a year old, tend to need to ramp up before spending marketing dollars.
Marketing Budgets prepares businesses to grow, but you also must prepare your marketing budget. It is best practice to have a process in place for handling unexpected costs. Whether you contribute a certain amount or percentage each month to grow an emergency fund or set aside one lump sum right off the jump start.
How to Plan a Marketing Budget
4 Important Keys to a Marketing Budget
1. Start with a marketing strategy. What is important and what are you wanting focus most on your company.
2. Set your marketing budget. How much do you want to spend on what you want to accomplish?
3. Allocate your marketing budget dollars. Set aside the amount of money that you want to spend on marketing each month.
4. Implement a marketing budget plan. Maximize Marketing through a strong strategic plan and spend competency.
How Important is a Marketing Budget
Many small-business owners think a marketing budget is a luxury — an unnecessary expense they can’t afford. But failure to appropriately market and advertise your business can have a significant impact on its ability to prosper. A carefully planned and budgeted marketing approach can help you effectively promote your business to its target demographic while staying within established financial parameters.
Marketing Strategy: A marketing strategy is much like a business plan. It helps your business identify its audience and build a plan around that audience.
Marketing Basics: A marketing budget allows you to invest in the most basic small-business marketing necessities. This helps that business grow.
Tracking Marketing: To ensure your marketing funds are being wisely invested and producing positive results.
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