How To Budget For Marketing
Developing a solid marketing budget is an important part of creating a plan of action that is realistic and will help improve revenues. Without a solid budget, you can accidentally overspend on marketing costs. Here are three steps to help you organize current finances, determine where to spend marketing dollars, and strategically make adjustments.
Organize and Understand Your Company’s Financial Information
• Understanding your revenue.
• Know your monthly revenue range ($20,000 – 30,000)
• Work off your baseline revenue ($20,000)
• Establish your budget and determine your monthly expenses. Your business expenses can include rent, salaries, office expenses, etc.
• You will subtract your expenses from your baseline revenue.
• This number will give you the money available for marketing and expansion. The typical number is 10% of net income.
Determine Where You Want to Spend Your Marketing Funds
After you know the total amount available to spend on marketing, the next part of creating a solid plan is organizing how you intend to spend that money. Four main factors contribute to how you spend marketing funds: the budget size, your past experiences, where you can reach the right audience and what is the Brand you want to present to your customer.
• Determine your target market.
• Where are they?
• Best way to reach them.
• Best allocation of funds with each medium.
• How do we present our Brand through our Marketing?
• Test our results and determine ROI.
Assess Data and Make Appropriate Changes
The final step of building a solid marketing budget is the analysis of the plan and adjustments that improve revenue production. Ultimately, marketing is designed to bring in extra revenue. If the strategy does not bring in new revenue in excess of the cost, then it is better to remove that strategy and try something else. The results of marketing may take time to realize.
Assessing the data is a vital part of creating an effective marketing strategy. Evaluation begins with comparing past performance to the performance after marketing the product or services. Look at the changes to revenue and determine if it has increased, decreased, or stayed the same. And ideally, you’re able to tie increased revenues directly to each advertising source.