When times get tight, business owners have to make tough decisions about where to make cuts. Often, the budget tightening results in less money spent on marketing. When you need to boost sales, it doesn’t make sense to spend less time telling current and potential customers about your products and services, yet still, that’s where many entrepreneurs look to “trim the fat.”
Why? Perhaps it’s because marketing expenses are not directly tied to the production of a product or the delivery of a service. Or, it may be because the impact of marketing efforts is not always immediately visible.
Regardless of the reason, it’s a bad idea. But that doesn’t change the fact that as a start-up or a growing business, you may not have a lot of money to spend.
Emily Johnson is creative director and partner at Revel Advertising. Her agency specializes in advertising and promotion for small business clients. Emily says even a small marketing budget can be effective. “There are always ways to find affordable promotion options,” she says. But she emphasizes, that no matter what your budget, it’s important to plan how you are going to spend it.
“The biggest mistake we see small business owners make is that they don’t plan a budget for the entire year, instead, they come up with an amount and spend it all on one tactic or campaign.”
Emily says a better approach is to develop an annual marketing plan to ensure that your brand maintains a consistent and sustained presence with consumers across different types of media.
“The more money you have to spend, the more media streams you can be present in,” she says. “If you have a small budget then it would be wise to make a media plan for the year but break it down into quarters.”
In that case, Emily suggests putting each quarter’s marketing budget to work in a different media stream. For example, the first quarter might be in radio, second quarter in billboards, third quarter in an SMS campaign and fourth quarter in direct mail marketing.
“Doing things quarterly makes it easier to track results because you will know when you started each campaign,” she says. “It’s easy to see what worked.”
The more structured the plan, the better. With an annual plan, you know exactly where your money is going and can keep track to ensure that you are not overspending or underspending.
Having a budget and a plan to spend it are important, but how do you know how much to set aside? There are two methods Emily recommends to her small business clients. “One way is to see what your competition is doing and try to match or exceed them,” she says. Another method Emily offers is to invest a percentage of your revenues on marketing. Look at previous year’s sales revenues and your projections for the coming year then take a percentage of what you expect in sales revenues and dedicate that amount to marketing. A common range is between 7.5% and 10%.
When times are tight, spend smart. Set aside a budget and plan every penny to help your business maintain an even playing field with your competition, stay top of mind with current and future customers and ensure the best return on your marketing investment.