MARKETING BUDGET GUIDE

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1 the SMALL BUSINESS MARKETING BUDGET GUIDE A publication of

2 2 TABLE OF CONTENTS Table of Contents 2 Introduction 3 CH. 1: What s in a budget? 5 CH. 2: Budgeting Tools 7 CH. 3: How much to budget 9 Conclusion 11

3 3 INTRODUCTION Despite how innovative or remarkable your product or service is, if you want to promote it, you will have to spend money on marketing. You can blame the tech world for this overall transformation. That s not to say that marketing was not relevant before; however, merely placing flyers in the window of your business, and waiting for the customers to pop-in just doesn t cut it anymore. With the advent of the Internet and social media, marketing your business has become even more critical. And if you don t have a marketing budget, you d better get one together, that is if you hope to sell what you have to offer. Before we get started, though, I have two pretty solid rules I encourage all of my new clients to adopt and implement regarding their marketing efforts. 1. Marketing is not an expense. Marketing is expensive, but it simply cannot be considered an expense. Rather, it is very much an investment. And like all investments, you expect a rate of return. Therefore, those marketing efforts that are not giving you a return on your investment need to go away.

4 4 2. Emotion beats logic every single time. I saw the following example once, and for the life of me I cannot remember where I saw it, but it went something like this: how many bags of cat food are advertised as being bird or mice flavored? None. They are turkey giblets with gravy or something like that. Now, I have never seen a cat chase or even try to eat a turkey, but I have seen them kill and eat birds and mice. Logic says they should flavor the food with what the cat actually eats, but emotion says they aren t trying to sell cat food to cats now are they? EMOTION LOGIC

5 5 WHAT S IN A BUDGET Because advertising is an offshoot of marketing, you will need to develop your marketing budget first, and then distribute your advertising dollars. We teach our clients four primary ways to determine your budget: To learn more about how to use these options, check out The Small Business Advertising Guide: Fixed percentage of sales 2. Comparable to competition 3. Objective and task-based 4. The maximum amount possible

6 6 Regardless of which method you choose, your marketing budget should be flexible enough to permit you to respond to changes within your business, your industry, and the market in general. Marketing is the comprehensive cover that encompasses selling a product or service and includes: Product planning Distribution Market research Communications Sales Pricing Your marketing budget should include all of the above-mentioned expenses along with a fixed amount for each department. You may want to include PR, advertising, Internet, direct mail, and promotions under a communications umbrella to make certain these functions all balance each other out. Market research, product development, branding, distribution, and pricing could go under another umbrella; perhaps sales might have its own department.

7 BUDGETING TOOLS 7 Since marketing budgets can become multifaceted, it is crucial to utilize budgeting tools that are efficient enough to keep everything organized. Some Straightforward spreadsheet programs may prove useful for undemanding marketing concepts, but as they become more complex, specialized software may be required. You need more than one piece of wood to keep a fire burning, and once your marketing ideas become more intricate, you will have to increase your tools in order to get the job done. Various software companies offer online and offline budgeting instruments, some are free, others for a price, but most offer a free trial period. Explore the numerous tools offered on the marketplace to see which is most compatible with your small business needs. Below are some of the hundreds of possibilities: Plan Guru PlanGuru is budgeting and forecasting software designed to help businesses and nonprofits make better decisions. Whether it s a high level forecast for the bank or a detailed multi-departmental operating budget, PlanGuru can enable you (or your team) to produce a more accurate analysis in less time.

8 Budget Maestro from Centage 8 Planning-Software.asp Budget Maestro s enterprise budgeting software streamlines the entire budgeting and planning process. By greatly simplifying the task of data collection, Budget Maestro dramatically shortens budget cycle time while improving the accuracy and relevance of results... and does it all without the aggravation of spreadsheets. Quickbooks from Intuit With QuickBooks Online Plus, a step-by-step wizard helps you easily setup your small business budget. Once you create the budget, you will find two valuable reports in the report selection menu - the Budget Overview and the Budget vs. Actual reports. These useful reports help you make smart business decisions that keep are on the right track to meeting your financial goals. Adaptive Planning Ranked first place by Gartner in customer satisfaction, Adaptive Planning performs budgeting, forecasting, and reporting for companies all over the world - from small business to very large ones, such as the American Red Cross.

9 9 HOW MUCH TO BUDGET Prior to considering which factors of your marketing budget should receive a certain amount of money, you must first decide how much you want to spend in general. In many respects, advertising and marketing are two sides of the same coin; therefore, when deciding your marketing budget it is imperative to include advertising as well. Nonetheless, marketing takes precedence because it usually includes a total package, whereas advertising can be delivered in snippets. If you have some idea of the amount of money it would cost to sell each unit of your product, or, how much it costs to sell your services to each customer, you could decide your marketing and advertising budget in concurrence with your sales goals. You may also want to take a more rigorous approach by linking your budget to particular goals you desire to accomplish like capturing the interest of a particular market via television advertisements.

10 10 Your marketing budget should also address additional marketing expenses that you plan to amass. For example, if you spend money to go to trade shows, or set-up booths, this is another type of marketing. You may also incur expenditures by hiring people to maintain your company s Internet website and social media presence. Perhaps your business will offer special promotions via daily deal sites or blog entries. When your business offers special promotions that permit your customers to purchase your products or services at discounted prices, even though this is not considered a direct expense, you should make it a part of your budget since it decreases revenues. Compare returns from your marketing campaigns to determine if you should end some and increase others.

11 CONCLUSION 11 In today s marketing environment, we have literally hundreds if not thousands of tools and mediums at our disposal; each with their own place and their own purpose. I have never worked with a client who needs to use all of these options, but I have also never worked with a client who needs to work with only one or two. So deciding which ones is right for your business and how much of your budget to allocate to each, is the process of strategic planning. This is one of the reasons we decided to build 726 Studios with the focus of providing full consultative marketing services designed to fit small business budgets. Today major U.S. companies spend hundreds of millions of dollars per year on marketing consultation services; small businesses simply cannot afford that. Give me six hours to chop down a tree and I will spend the first four sharpening the axe. Abraham Lincoln Someone s sitting in the shade today because someone planted a tree a long time ago. Warren Buffet If you don t know exactly where you re going, how will you know when you get there? Steve Maraboli Failing to plan is planning to fail Alan Lakein Strategically planning your marketing efforts, gives you the ability to have your business goals align with your marketing results. Sales, pricing, packaging, distribution, servicing, and every other piece of your business must all work in conjunction with your marketing, and vice versa.

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