Andy shares with us some helpful tips on how to create a budget for next year’s marketing, and pitfalls to avoid.
Planning a marketing budget is not an easy thing – most of the businesses I meet with, regardless of the size, know that it’s a complex process.
Companies should spend between 5 and 10 percent of their revenue on marketing alone, and if you’re including a sales team, you’re looking at a total of 13 to 15 percent.
That probably seems like a really large chunk of your revenue, but you have to think about what your business objectives are. If you’re looking at having really high growth, like 10% or 15%, but you’re only willing to put in .5% or 1% into your marketing budget to drive new leads and get exposure, then you’re really off on your strategy from a business perspective, versus what you’re developing as your strategy for marketing.
So determining a budget is a really tough piece – it’s looking at your goals as a company, what you have available to spend, and what do you want to put into it to achieve your goals.
You should have an annual budget, then break it down into each month, so everyone knows what you’re trying to achieve and what resources are available to spend each month to help achieve those goals.
One last thing is, if you’re looking at large projects, like websites or mobile apps, or some other long-term project, you should pull that out of your budget as a line item, so you can have that as a piece that you’re building.
Especially if it’s something thats going to last 3-5 years, or even 7 years like a website where you do that initial build, pull that money out and think of it as a 3-year investment. And if you’re taking 2% of your annual revenue and putting it towards your web development over a 3 year period, what could that number be to do that project right, and then what are you putting in each month after that for the next 3-5 years.
So when you’re looking at budgeting, make sure you’re thinking about a lot of these factors, but also make sure you don’t have NO budget.
If you are looking to build a smarter marketing plan, try using a tool we’ve build called PlanBold.