“A man who stops advertising to save money is like a man who stops a clock to save time.”
These are the words of Henry Ford, a successful American Industrialist.
When it comes to deciding how much to spend on your marketing, one common practice is to base your budget on your revenue. For a small to medium business, somewhere between 3 and 5% of your gross or projected gross income is a good starting point. Influencing factors here can include which industry you are in, the scalability of your business and how quickly you need new business.
Between 3 and 5% of your gross or projected gross income
If you are starting out in business, then you will have to consider spending more and expect that to be between 12 – 20% of your sales or projected sales. This gives you the budget to establish your business in the marketplace. You need deep pockets and a lot of time to start your own business, it’s not for the faint-hearted.
The U.S.A Small Business Administration suggests 7 to 8 percent of your gross revenue should be spent on marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin, after all expenses, is in the 10 percent to 12 percent range.
You need to wise about where that marketing budget goes. There are plenty of ways to spend it such as:
Strategy
Consulting
Rebranding
Website
Blogs
Sales collateral
Campaigns
Advertising
Events
Search engine optimisation
Press releases
Awards submissions and promotion
Email marketing
Social media
Paid search
Mailouts
Print media
If you take anything away from reading this, please let it be that you have to spend money on marketing, it’s the lifeblood of your business. You also need to know how much you’re spending, on what marketing channel, what the acquisition cost is for customers through those channels and what the lifetime value of your clients is. If you can put that all together you will be able to implement a successful marketing strategy. If you need help contact us.
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