Setting Your Marketing Budget

Before you begin, you should decide how aggressive you would like to be in growing your company in the coming year.

If you are a new company, you probably want the most aggressive plan you can afford in order to get a foothold in your industry or field. If you are looking for steady growth, your spend may be moderate, and if you are simply hoping to maintain the loyalty of your existing clientele, your final numbers may be on the lower side.

1. Start with the basic statistic: 2-8% of gross revenue

You’ve probably heard most small to mid-sized business (SMB) authorities report spending for marketing to be approximately 2-8% of gross revenue. You can use projected gross revenue, or the previous year’s numbers. This is a good place to begin thinking about your budget.

2. The customer acquisition model

If you have been in business long enough to know about what it costs to acquire a new client, use that number (or your cost per lead) along with your business goals to calculate your marketing costs. You may be surprised at how effective this particular method can be, especially if you have been doing some traditional marketing techniques that involve a fair amount of travel and cold-calling.

3. A tactics-based approach

Your marketing strategy should include your business objectives, along with specific tactics you intend to use to meet those objectives. Now you can price out the specific costs of each tactic.

The most important tactics get funded, and the less critical items wait for next year.

Don’t forget that you can save on costs with a little bit of do-it-yourself heroism. Time counts as money, but sometimes you really can invest more time than cash.

Take your marketing budget seriously, and spend some energy with your staff determining what you can spend. This will not only make your business run more smoothly, it will also make marketing decision-making much easier.