Whether it's a small or big business each needs a budget to attract new customers to increase the sales of their products. If the budget is not pre-defined the business may face cash flow challenges during the advertisement and marketing of their products. In this article, I will discuss in detail about marketing Budget for small businesses and after reading this article all of your doubts will clear about small business marketing budget.
Table of Contents
The marketing budget for small business
Top 7 steps to develop a small business marketing budget
how much does advertising cost for a small business per month
marketing campaign cost breakdown
The marketing budget for small business
The marketing budget for small businesses varies from industry to industry. The thumb rule is, B2B businesses should have to spend 2-5% of their total revenue on marketing. In the case of B2C businesses, the percentage becomes higher between 5-10% of total revenue. This is because they have to reach more audiences of different segments through marketing to convert them into their business customers.
A 2019 BDC survey of more than 1,400 Canadian small businesses has found that the average marketing cost is $30,000 per year. A business that has 20 to 49 employees has a marketing cost of twice $30,000 and a business that has 50 or more employees has a marketing cost of more than $100,000.
Top 7 steps to develop a small business marketing budget
1. Vision Clarity
You should have a clear vision of your business marketing strategy. Such as: who is your target audience, how much you can afford to pay for a single lead etc. Because When you have clarity about that you will exactly know when to stop a marketing campaign and when to run it. This will help to generate a good return on investment ( ROI ). After this, you have to set goals that meet your vision.
2. Marketing channel changes varies audience to audience
Each individual spends their time in different places. For instance: youth spend their time on Facebook and Instagram, business and job seekers spend their time on LinkedIn. So it is important to know where your future customers spend their time, this will help you to create a marketing plan whose ROI is high as compared to the plan which does not include the place where your target customers spend most of their time.
3. The real cost of marketing
The cost of marketing depends upon several factors including the types of your product and customer, the marketing team, consultants, freelancers, etc. You should have some extra amount of cash in advance. So if you require urgent cash to carry your marketing then you don't have to go for a bank loan or other loan. But keep in mind you have to only spend the cash on marketing which you can afford to pay.
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4. High risk
You don't have to spend unnecessary cash on new marketing channels because there are chances of failure. So whenever you enter into a new marketing channel only spend the amount of cash that meets your risk appetite and when you get positive results or your ROI is high then you can spend more cash on it to grow your product or service sales.
5. Cash Flow
There is some marketing campaign which requires cost in initial days and will show results in future. So, for this type of marketing campaign, you have to spend your cash in such a way that it will not affect your business cash flow.
6. Create a marketing budget
When you have a clear about your marketing goal. Then create a marketing budget on software or excel that includes the costs of the marketing team, freelancers, contractors, etc. Additionally, you have to track records of budgets and make changes to them if required.
7. Analyze the result
Analyzing marketing results is equally important to planning and implementing marketing goals. Because if you don't do that you will never know from where you get your product sales and from where you are losing your money but when you exactly know about it you can increase your sales and also prevent your business from losses.
how much does advertising cost for a small business per month
This depends upon the marketing platform and the type of business you have. For instance: there are 2 business owners one has a business around beauty other has a business around finance if both of them sell their products through Google ads then the first one have to spend less cash as compared to the other who has a finance business. Because finance customers are more costly as compared to beauty customers.
marketing campaign cost breakdown
Some of the common marketing campaign costs are:
1. Content creation: It includes the cost which you spend on content creation in form of text, video, copywriting, etc. Additionally, it also includes the cost of the tool and software you use for content creation. But if you hire a freelancer then you don't have to pay this cost, you only have to pay the cost of a freelancer.
2. Product promotion: This includes the cost which you spend on a marketing channel to grow your product awareness or sales. The marketing channel can be t.v., social media, Google ads, etc.
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3. Technical cost: Technical cost involve the costs that you spend on technical material such as website hosting to support your marketing campaign.
4. Analysis cost: this consists of the cost which you spend on the analysis of your marketing campaign to ensure that it is successfully running or not.
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How do you calculate the marketing budget?
For this young have to be clear about business goals and objectives and the resources available. After that find the marketing which requires less cost to generate leads for your business. Finally, add all the costs to determine the total marketing budget.
How much time should a small business spend on marketing?
It depends upon your team, resources, and marketing goals. But in general, you have to spend about 20% of your time on marketing. Suppose you work for 40 hours then in this case you have to spend your 8 hours in business marketing.
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