You have budgeted for personnel, leases, materials…you are all set, right? You can have the greatest product in the world, but who will know about if, it you don’t market yourself and your business, effectively. There are any number of things for which a small business must account, financially and marketing is another one. So, how does one go about creating a marketing plan for a small business?
Cater to Your Audience
Social media is a valuable marketing tool and inexpensive, but it doesn’t reach all audiences. For example, if your product is something that is meant to benefit senior citizens, perhaps pouring your marketing budget into social media is not the best strategy. Creating a well-developed marketing plan, one that reaches your target demographics effectively, will not only enhance your business, but will ensure that you are spending those marketing dollars wisely.
Tracking and Harvesting
Sadly, we are not talking about your most recent Level 90 character in World of Warcraft, but rather your sales funnel. Your sales funnel refers to the buying process that companies lead customers through when purchasing products. A sales funnel is divided into steps, which may differ, depending upon the specific sales model. One common sales process is divided into seven phases, including:
- Awareness Phase – in which prospects become aware of the existence of a solution.
- Interest Phase – in which prospects demonstrate interest in a product by conducting product research.
- Evaluation Phase – in which prospects or prospect companies examine competitors’ solutions as they inch toward a final buying decision.
- Decision Phase – In which a final decision is reached and negotiation begins.
- Purchase Phase – in which goods or services are purchased.
- Reevaluation Phase – in B2B sales it’s common for offerings to involve contracts that need to be renewed. As a customer becomes familiar with an offering, and especially as a contract draws to a close, a customer will enter a reevaluation phase during which they’ll decide whether or not to renew their contract.
- Repurchase Phase – in which a customer repurchases a product or service.
To ensure that you create the most effective marketing budget for your small business, you will need to take a good, hard look at your sales funnel and make sure you that you fully understand all it’s nuances. This is where you will track your small business’s revenue cycles, and you can easily harvest this data from your CRM or marketing automation software. The specifics at which you want to be looking are:
- Number of site visits per month
- Number of leads you are generating per month
- The amount of those leads that convert to sales qualified leads (SQL’s)
- How much does it cost to generate these SQL’s, for example, the cost of your website development, whether or not you are outsourcing content development, the time being spent by your marketing and/or sales personnel to build these relationships, Pay-per-Click, and so on.
- Number of leads that become opportunities
- The number of these opportunities that become deals
- Average value or revenue of a new deal
Being able to answer these questions and having this data will be invaluable as you move forward with creating a marketing budget for your small business that is realistic and effective. Too many small businesses overspend or underspend in certain areas, such as targeting specific demographics or customer-facing efforts; having accurate data will allow you to better make informed decisions as you create your marketing budget.
Knowing your operational costs is also key in creating your small business marketing plan. One important area at which to look is whether or not your current staff has the bandwidth to take on additional marketing efforts. It’s perfectly okay if the answer to that question is, “no”. After all, you may not have been considering the marketing efforts of your small business when you hired your current employees and set about delegating responsibilities. There is a chance that your staff, wanting to be team players and demonstrate to you their value, may insist that they can easily handle the added responsibility. This is where it will be your job, as an employer, as a small business owner, to honestly assess whether or not you are spreading your employees too thin. All good bosses want to nurture the professional development of their staff, but by piling too much on them, it can have the opposite effect, as employees may become unable to continue devote the necessary time and energy to each task or project. Additionally, an overworked employee becomes a disgruntled employee and no small business owner wants that! An overworked employee can derail even your most well developed marketing plans with negative word of mouth.
Should this be the case, you will need to again, dig deep and weigh the pros and cons of hiring additional staff or outsourcing to a reputable marketing agency. This is when you will want to consider the Three C’s: capacity, competency and cost. Competency being the skillsets required, the amount of output or productivity required is the capacity, and cost being both how much you will spend and the return on that.
Regarding competency, let’s say that you need to shoot some television ads or video for your small business’s website. Is this something that you will be doing with enough regularity that it makes sense to hire staff and take on those added costs of employee benefits? Or, is this effort in response to a specific campaign? If it’s the latter, then outsourcing to a reputable marketing agency may be your best option, at this time. Yes, it will perhaps cost more, up-front, but you will not be accruing the costs that are associated with hiring additional staff, such as benefits, etc. However, if you find yourself outsourcing too much then it may be time to revaluate and consider hiring additional staff. If still uncertain, this is yet another time to reach out to your network of small business owners or mentors and receive their input on whether they keep their marketing in-house or if it’s outsourced to an agency. (Or, perhaps a combination of the two.)
In terms of knowing your operational costs, you will also want to consider the potential cost of your inaction. Is the market rapidly changing in such a way that you are unsure of who your target demographic is? Or, by not participating in a particular event, by not spending the money on a television spot, will you not be reaching potential customers?
It is a lot to consider, and while it may seem overwhelming, if you are keeping on top of your harvesting and tracking, as mentioned above, you should be able to keep moving forward with developing a small business marketing budget that is best for your, your business and your needs.
Budgeting for Your Goals
As a small business owner, it’s safe to assume that you want your business to grow, so you have to feed it, much like a child. Do you only feed a child whatever is leftover, after you have eaten? No. So, don’t take that approach with your small business when creating your marketing budget and don’t only devote whatever funds are left, after covering your operational costs. Generally, for a small business with a budget of $5 million or less, it’s customary to devote 7-8% of revenue to marketing efforts, splitting between brand development (website, promotional materials) and campaigns, such as events.
What are your goals for the next quarter? What are your goals for the next year? To accomplish these goals, how many new customers will you need to bring in? How much product will you need to sell? What services will you need to provide? From there, what will it cost in terms of overhead to meet this goals? If you have been gathering the necessary data via whatever software program you use, setting these quarterly and annual goals will further guide you in developing your small business’s marketing budget.
Spend Money to Make Money
Do you or your children have student loans? When taking out those loans, did you see it as just another expense, or did you see it as an investment in your (or, your child’s) future? Most likely, the latter. The money you spend on your marketing efforts should be viewed the same way, as an investment. Keep track of your small business’s return on investments (ROI) as you look at what you are spending on your marketing initiatives. If you have done your homework, you will be pleasantly surprised in that the money you spent on your marketing efforts helped increase your revenue. This is an opportunity to change your perspective: rather than seeing marketing as a cost center, which many companies do, try to see it as actually being a source of revenue generation.
Determining whether your small business is in the planning stage or the growth stage will also inform how you go about creating your marketing budget.
If you’re in growth mode, you’ll need to generate top-line revenue at a faster rate, so you might consider deeper investments in more of the quick-win marketing techniques.
Take a continuous approach in further developing your website, so your website can become a central marketing hub rather than an online brochure. Ongoing development and maintenance could consume a significant part of your budget, but the rewards are well worth it.
If you’re in more of a planning mode, where steady growth is more welcomed than spikes in revenue, you’ll want to consider a longer-term marketing play through earned media. This includes generating and publishing great inbound content and eventually earning new business over time.
Be honest as to where you are, as it’s okay to acknowledge that you are in a planning mode. Even children going through growth spurts slow down from time to time.
Understanding current and future trends can also help inform your small business marketing budget process. One thing you will want to be careful of is to not fall into the trap that many companies do, which is to react to the latest marketing trend without proper research and validation that it will ensure they reach the target demographic. (Again, is social media the best way to go about reaching an older population?) A solid marketing plan (and, therefore, budget) should include both traditional approaches, such as television and print media, as well as digital media such as FaceBook and Instagram. But, always consider your audience: who are you trying to target, to what will they most likely respond, and from there you can better craft your message.
No two small businesses are alike, and therefore, no two small business marketing budgets will be alike. As your business grows and changes, your marketing efforts will, as well. But, whatever changes are occurring in your small business, don’t skimp on your marketing budget, incorporate all aspects of marketing efforts, and stay on top of your data analytics, while being honest as to where you are, so that you can continue to make the best marketing choices for yourself, your business, your employees and your customers.