Creating a Small Business Marketing Strategy and Budget: A Definitive Guide was written for Playlouder by a contributing author. Please note that contributing opinions are that of the author. They are not always in strict alignment with my own opinions. –Joe.
As a small business owner, you know that marketing is essential to your business strategy. It helps you create awareness, generate leads, increase revenue, and keep your company growing.
According to the SBA, the latest statistics show 33.2 million small businesses in the US. But unfortunately, the statistics also show that more than 20 percent of small enterprises fail in the first year, and almost 50 percent of small startups fail within the first five years, according to the Bureau of Labor Statistics.
Those stats prove the importance of a sound marketing strategy, but with limited resources, how do you both identify the elements of and adequately budget for an effective marketing campaign? The task may seem daunting and overwhelming, but it doesn't have to be.
In this post, we’ll dive into marketing budgets and marketing strategies. Then, we’ll reveal six steps to help you create the plan and discuss ways to allocate your funds correctly.
On top of that, we’ll provide you with the best approaches for tracking your spending. So, keep reading!
What Is a Small Business Marketing Budget?
A properly budgeted marketing plan helps keep your strategy on track with your startup's overall finances in mind so that you can achieve your business goals.
So, what is a marketing budget? First, it outlines how much a company spends on marketing and promotion activities for its brand, goods, products, or services.
It includes all the expenses of the marketing strategy, such as advertising or content creation, and the period. Usually, it’s a specific period, determined anywhere from a quarter to a year.
Devising a Small Business Marketing Plan in 6 Steps
A well-planned marketing strategy budget ensures you invest your resources wisely while effectively reaching your target audience and goals.
We’ve divided the process into simple steps so it doesn’t seem overwhelming. Check out these six crucial points to correctly set up your marketing strategy and budget.
Step #1: Decide on Goals and Objectives
The first step is defining your business goals and marketing objectives. Ask yourself what you want to achieve with your promotion campaign. You can establish goals that focus on the following:
- Increasing brand awareness
- Driving more sales
- Boosting leads
- Earning more subscribers
- Retaining existing customers
Remember that your goals and objectives must be relevant, specific, attainable, measurable, and time-bound.
For instance, increase organic traffic by 25% by the end of the year. An SEO strategy may come into play for that end goal, as it helps move your site's position to the first page.
According to Backlinko, only .63% of Google searchers clicked on something from the second page, meaning retaining a first-page ranking would be a worthwhile goal in your marketing plan.
Step #2: Establish the Sales Cycle
Understanding your sales cycle is crucial in determining the appropriate fund allocation for your marketing activities.
When you make a budget breakdown, you want to specify the sales funnel. It’s an essential element that allows you to define the areas you will spend your money on.
In other words, your sales funnel is a process your audience goes through to become a paying client. It’ll typically involve the following stages:
- Awareness (the audience becomes aware they have an issue and starts seeking solutions)
- Interest (the first interactions that hook potential customers and draw them slightly deeper into the funnel)
- Consideration (the audience looks at the choices available)
- Intent (the lead narrows their focus on businesses that deliver the best solution for their demands);
- Evaluation (the prospect has now almost decided to purchase your product or service. They might begin negotiation over the price, terms of purchase, or both.)
- Purchase (they pick your company and become a client).
Understanding your startup’s sales funnel helps you notice where you may need a digital marketing strategy to keep more people from falling out of it.
For instance, let’s say you need to invest more funds in techniques that will help you gain leads from the consideration to the decision phase.
Step #3: Define Outside Costs
Before you start planning your marketing activities, it's necessary to consider any outside costs that may impact your budget. So take time to set your external spending, too. These may include creating and shipping products, employing staff, etc.
You need to understand your gross margins in detail before you can assign an amount for marketing. Research the market rates for the services required and include them in your budget to avoid unexpected expenses.
You must understand your potential marketing spend to responsibly define what promotion tools you can invest in and develop a baseline for your return on investment (ROI).
Step #4: Conduct Market Research
To create a successful marketing spending plan, you must understand where you fit into your industry.
Perform market research to get an idea of your target audience. Conduct surveys and interviews and analyze the data to gain insights into your customers' needs, preferences, and pain points.
This information will help you create more targeted messages and campaigns that resonate with your audience.
Also, pay close attention to the competition. When you know how you stack up against your opponents, you can better specify which strategies you need to employ to beat them.
For that, you may resort to special competitor analysis tools that help reveal how your rivals perform online and give you campaign ideas.
Step #5: Determine Strategies
Based on your goals, objectives, and market research, decide which marketing strategies you want to use.
You don’t need to be 100% sure about the digital approaches to utilize, but you should clearly know the ones that seem the best fit for your business. Here are some to consider:
- PPC (paid advertising)
- SEO and content promotion
- Local optimization;
- Social media marketing and advertising;
- Email marketing;
- Reaching influencers, etc.
Some of them we've already mentioned in the previous steps, but take your time and learn the specifics of each. They all have different costs and ROIs, so it's crucial to prioritize the ones that perfectly align with your purposes and spending plan.
Step #6: Study the Prices of the Chosen Strategy
Finally, the last essential component of preparing a marketing budget for a startup is performing price research.
Whether you’ll run your campaigns independently, hire a digital marketing agency, or hire a freelancer, you need to know how much it costs.
For example, if you plan to run Facebook ads, research the cost per click, impressions, or conversions and estimate how much you’ll need to invest to achieve your goals. Remember to include additional costs, such as design or copywriting fees, when calculating your budget.
Once you've completed these steps, it's time to allocate your marketing budget.
Based on your business finances, you’ll begin with a maximum sum to spend on your promotion strategy. Consider the following advice when allocating your budget:
- Prioritize high-impact activities that align with your goals and objectives.
- Allocate more resources to activities that have proven to deliver a high ROI.
If you are too busy to take this on yourself, consider hiring a digital marketing agency or company. With a service like that, you’ll receive everything from people to tools and will pay per month to keep your promotion campaign running.
If you rely on a freelancer for help, remember that they specialize in one or a few types of strategies. You'll typically pay on a per-project basis or by the hour. The price may also depend on their experience level and the additional software they use for their work.