In the local marketplace, we’ve recently worked with many small- to medium-sized businesses who have asked what they should spend for marketing or when they should begin investing more heavily in marketing to take business to the next level.
Frankly, I’ve been surprised that so many entrepreneurs or executives are asking those questions. Many don’t have a formal marketing budget, let alone a plan. Some are more sales driven. And any money spent on marketing may seem like dollars coming right out of their own pockets. They are hesitant to invest. Especially in the current economic climate.
Let’s tackle one question at a time. First, “What should we spend for marketing?”
There is no secret formula. Plain and simple. Historically, recommendations from marketing gurus suggest anywhere from three percent to 10 percent of expected revenue. Three percent is extremely conservative. But it’s a start. If you’re not investing anything at present, is three percent – less than what you likely contribute to your own personal 401K – too much to invest in the future success of your company?
If your company anticipates $1,000,000 this year, we’re talking $30,000. If your business is half that size, $15,000. Those are relatively small marketing budgets. But it’s a start. Try three percent for one year. Then plan on increasing by one percent each year as you begin to realize success. Measure your outcomes and adjust accordingly. The key is just to start.
If your company has been growing steadily and you’re satisfied, then spend less. If your key is to grow, build or expand more aggressively, then invest more. The more you invest, the better opportunity you have for a larger return. And by all means, don’t completely cut marketing out of your budget. You will end up spending more later to try and regain lost business and awareness.
Second, “When should we really start ramping up?”
If your objective is to grow and build a brand – or even to maintain market share, you should be investing well. Again, plain and simple. If you’re not willing to invest in your own company or brand, why should anyone? If you don’t spend to promote, how can you expect anyone to find, recognize or think about your brand?
Today’s environment affords marketers more outlets and opportunities than ever before to reach their audiences. Be clever. Consider strategies and tactics that are laser pointed on your specific niche with little waste or reduced outside cost investment. Look to online, social media and media relations to provide platforms for your messages. You can extend your budget and get more bang for your buck when execution and production costs are lower.
So, now I’ll ask a few questions of my own: Are you investing? What’s your budget? Do you have a plan?