How much should you spend on marketing?
Here follows some guidelines for setting your small business marketing budget.
First, before you spend a cent, you need to do everything that is free.
The first and most important free tool is what I call a “statement of value” – a short, two sentence introduction to your business that can be used whenever you meet someone.
A statement of value must be easy to understand even to the most uninformed person, and clearly highlight the value you offer. When someone hears your statement they should instantly think: “I get what he/she does and I see why it can be valuable”.
Here is an example of my personal statement of value:
I am a marketing consultant to entrepreneurs. I help them grow their business through building strong brands supported by world class marketing.
The second free tool is your network and the word-of-mouth marketing that it can generate. All your friends and family should know what you do and actively be on the lookout for opportunities. If you have a good offering and an active personal network, initial sales should happen automatically.
But what about spending money on marketing?
I suggest three guidelines:
Brilliance or nothing
First, you should determine the standard of marketing that you are happy with. Or rather, the standard that is reflective of your business. As with anything, there’s always a cheap-and-nasty option available, especially in marketing. But does a half baked Facebook page, cheap website, poorly written brochure or average looking logo do justice to your company?
Frankly, I don’t believe any business can afford to do amateurish marketing, so this first guideline really is not optional: you’ve got to spend the money to ensure marketing activity that is executed brilliantly. It is all or nothing when it comes to marketing. If you have a Facebook page, it needs to be brilliant. A website? It should be top-notch.
Half baked marketing is negative marketing. It silently hurts your business.
Guideline: Spend whatever it takes to ensure brilliant execution.
Business driven marketing
Second, the marketing budget is impacted by your business goals. Where do you want to take your company over the next year? How can marketing enable that? Marketing should never happen separate from the business. It is not a sideline function.
Do you want to grow aggressively? Defend aggressively? Enter a new market? Up profitability? Attract top talent? These are all business goals with direct marketing implications.
Guideline: The more ambitious the business goals, the bigger the marketing budget.
Third, the complexity of your offering and customer will impact the size of the marketing budget. If you are selling specialised industrial services to large corporate clients it will take much more effort to communicate the right message to the right people, compared with selling an ice cream to an individual on a hot summers day.
Guideline: The more complex the market, the bigger the marketing budget.
So here is a little equation for setting your small business marketing budget:
Marketing Budget = Free Marketing + Brilliant Marketing + Business Ambition + Market Complexity
Based on my experience, I can almost guarantee the following:
- You have not maximized on the free opportunities yet.
- You’re almost certainly underinvesting in marketing.
2016 is a good time to change this.
Image credit: Flickr