Updated: Apr 24, 2020
We all know marketing is vital to a business. How much should you spend?
As a small business owner, I know money can be tight. One small spend in the wrong direction could plummet you into the red in one of many ways. Don't let that stop you from promoting your business and gaining new clients. Done correctly, advertising and marketing repeatedly pays for itself.
It’s hard to determine a good marketing budget at the outset, especially if you don’t have as much expertise in that area as you want. The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue on marketing if you make less than $5 million annually in sales and have a net profit margin between 10 and 12 percent. Now, that is just a guideline.
The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing if you’re doing less than $5 million a year in sales and your net profit margin, after all expenses, is between 10 and 12 percent.
You can also google any number of articles on marketing spend. You’ll find statements like “the average company invests x percent of operating budget on advertising” or “we spent x and received an ROI of y percent.” These numbers can be valuable, but they are not customized to your circumstance.
Ultimately, you decide your marketing budget. (Isn’t owning your own business great?)
Now that you know the general cost you can expect to allocate, think of the goals you want to achieve this year. They should be attainable but lofty. Goals too easily achieved are the low-hanging fruit of the business world. Yes, go ahead and grab it. But plan to get the fruit higher up in the tree, too!
Your goals could consist of building a new website to generate leads, revamping your brand to spark fresh interest, or purchasing a batch of Facebook advertisements to build your social media following.
Your best bet would be to contact a marketing professional.
Drop me a line if you’d like some guidance. I will give you a general idea of what your goals will cost and whether or not they might be good for your business. There’s no use spending money on something bound to fail, so we’ll talk through your plan and make sure each item is right for your business at this time.
A complete review of your marketing assets will show you what’s working, what’s not, and what needs tweaking.
We’ll do a competitive review of others in your business niche and see where you rank. A complete review of your marketing assets will show you what’s working, what’s not, and what needs tweaking. Maybe you have more of a head start on your marketing efforts than you thought!
If you’re still not sold on setting a budget aside for marketing, here is one technique you can accomplish on your own for free: post regularly to social media. Regular posting to social media can be an important source of new leads for your small business.
Profiles on social media sites like Facebook, Instagram, Twitter, LinkedIn and Pinterest are free to start. Set up a business page to keep your professional and personal lives separate on these channels, unless your personal life is your brand. (Note: this only applies to brand ambassadors and influencers who get paid for their lifestyle.)
A more common example: let’s say you have a small plumbing business. You start your Facebook page and ask a small group of family and friends to Like your page. That’s great! But to take advantage of the social power Facebook offers, you have to do more.
Start small. Post photos of projects that you work on. Take care to remove identifying customer location/information as you snap your pics, unless you have their permission. Images from your latest shower install could convince others your work is worthy of their new master bathroom. Just make sure to do it consistently. Nothing’s sadder than a social media account that hasn’t been updated in months—or years.
Another free strategy to use is Facebook’s Reviews feature. Ask your happy customers to visit your page, Like it, and give feedback on your work. Clients can leave a review in the manner of star-based rankings and comments. This could be your biggest marking asset.
UPDATE: Facebook has changed their reviews feature to focus on recommendations. The more recommendations you have, the higher your ranking will be. You can still ask your customers to "go recommend me on Facebook."
Most people are wary of advertisements and being sold to, especially in this day and age when you are constantly being tracked by Google and repeatedly served ads targeted to your search history.
You’ll find it easier to convince prospective clients that you’re worth hiring if they can read recommendations by real-life customers. After all, isn’t that how you shop?