This is one of those questions that business owners wonder about, but aren’t sure who to ask. And yes, you should have marketing in your budget. It’s not a “wait until a good opportunity comes along” sort of thing.
If you budget for marketing and create an actual plan – you are 95% more likely to:
- Actually market consistently
- Spend to your budget, rather than impulse shop
- Track and measure success of marketing efforts
- Be consistent in your message and delivery
So back to…how much should you spend? A good rule of thumb is at minimum of 4-7% of your gross sales. Some marketers recommend as much as 10%. There are many variables, like the maturity of your business, percentage of repeat business and the lifetime value of a client. (We’ll talk about how to figure that out soon!)
But if you’d like to get some specific, every industry has a typical percentage of sales that is generally used for advertising and marketing expenditure projections.
Why not reach out to your industry trade and professional groups? They should be able to give you the specifics in your field.
Alternatively why not start by determining how many customers you want deciding on an acceptable customer acquisition cost and then multiplying the two?
Drew,
I agree – you could get out of control if you don’t have budget in place 🙂
My marketing budget for my offline business is 5% from revenue/sales. For my online busienss, I budget 20% for the marketing.
Cheers!
John,
Without a doubt, there are many ways to set a marketing budget. And there is probably not one absolutely correct way. My point is — you need to have one.
As long as the methodology is sound — you are probably ahead of 95% of your competitors simply by having a budget at all!
Drew
Noobpreneur —
Bravo for having budgets in the first place. How did you come to determine your percentages?
Drew