How to Make the Most of A Small Marketing Budget
By failing to prepare, you are preparing to fail. ~ Benjamin Franklin
When I start working with a small business’s finances I always begin with their budgets, and the budget that 90% of business owners want to tackle first is almost always their marketing budget. It makes perfect sense, marketing is what will get the word out about your new business and start driving profit. The biggest cost for any new small businesses is competing against larger companies who have marketing budgets much larger than theirs. This does not have to be negative; any size budget can effectively be used to generate great marketing results.
The most important step to make the most of a small budget is researching and choosing the correct avenues to market through. Once you have determined your target customer, put a solid strategy in place and start your marketing activities be sure you regularly visit your marketing activities and its results.
There are 2 types of budgets:
- An Operating Budget which is a prediction of all expected revenues and expenses over a 12-month period. It projects your gross and net sales, along with your net profits or losses. An operating budget allows business owners to explore different assumptions that the business may go through in a one year period. The focus of an operating budget is to ensure there are sufficient funds to maintain the operation of the business, and that those funds are distributed in the most cost-efficient way.
- . A Cash-Flow Budget is based on actual revenue. Positive cash flow means the business generates enough money to pay all the bills through out the year. With that being said, it’s important to remember that a business ca be profitable yet have cash flow problems. This is an issue for business that purchase inventory upfront and will not receive a profit from the sales for 30 days or more. In these cases a cash flow budget is best because it allows owners to see where revenue gaps are and to have alternate financial resources in place to keep the business running smoothly.
Step 1: Build a Strategy
To be effective you must first answer the question, “what do I want my marketing to do?” This is what you will measure your results against. Brainstorm a few ideas, and decide which idea will best reach your customers. Next, you are ready to build a strategy around your idea. Some questions to get you started might be:
- What specific theme will you focus on? (will this include print & video)
- How will you make your theme or message most relevant to customers?
- How you will measure the results of your marketing?
- Will you have assistance from an outside PR/Marketing agency?
- What social media networks can you market on (Paid & Free) to build customers?
Step 2: Build a Budget
Developing a good marketing budget is the most important part of your marketing plan. A solid budget allows you to make realistic choices as to what your business can do to increase revenues. Without a budge your business will be in a financial rut from the start . Leave room in your budget for last-minute changes or updates to your marketing plan. As your business grows or shrinks, it will directly affect the budgets you have in place. Here are some steps you can take to development a marketing budget that won’t eat up your finances:
- Do an overhaul of your finances to determine how much revenue your business generates each month.
- Subtract your monthly expenses from this revenue, this is what your actual working revenue is.
- Determine what percentage you want to focus your marketing on. For example; if you’re doing print and email, will you split it 50/50 or will 80% go to email and 20% to print?
- Look at your current marketing strategy and find ways to expand on it with the least amount of funds. If you choose new marketing avenues, be sure to use a small portion of your budget until you’re sure it’s working for your business.
- Always seek business to business marketing opportunities that will cost you nothing but a few hours of work services.
If you’re overspending on your marketing, then you’ll never see the additional revenue that you’re working so hard for. Remember, the only purpose of marketing is to generate more revenue. If your marketing strategy is not bringing in new revenue, you need to let go of your strategy and try something new. Talk to business owners that are not your direct competitors. Use the information they give you as a financial benchmarks for your business. Whatever marketing strategy you choose, be sure to build a budget around it that will allow you to reach your business goals.