Budget Marketing Dollars for Results Not Numbers
The Small Business Administration (SBA) recommends spending 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales. According to the SBA, if you are doing $5 million in sales, you should budget of $400,000 per year.
That’s a big pile of money, but it is a benchmark based on averages across many sectors. However, if you want a successful marketing budget, you should start with your goals, not a percentage. The percentage only tells you when you are indexing higher or lower than other businesses, it doesn’t tell you if you will be successful.
If you are not forecasting ROI, then you don’t have benchmarks from which to target money or reduce money depending on the success of a particular campaign or effort.
When you have benchmarks based on ROI, then you can and should adjust your budget to support the digital channels that are exceeding the benchmarks and delivering the desired results.
So set your total, or not-to-exceed budget level, and then readjust every 3 months based on the data and your KPIs. Invest more or heavy-up in digital channels where there is potential or signs of significant growth.
1) Start with goals 2) Develop benchmarks 3) Assign budget to reach those benchmarks. 4) Adjust every 3 months 5) Report in a dashboard. It’s budgeting to results, not to a number.