Why a Small Business without a Marketing Budget is like a Kardashian with a Reality Show

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It Makes No Sense!

There, I said it and without a doubt, you know where this writer stands on the topic of the aforementioned reality television franchise. Notwithstanding the cheeky tease, the analogy is perfectly valid. It makes no sense for a small business: startup or established, B2B or B2C, to not have a budget for marketing. We have said it on this site before and we will continue to provide you with resources, tools and inspiration that empower you to connect with customers and to build your brand. If you are searching for guidelines on budgeting for marketing, you will find the following advice and recommendations extremely helpful.

In a post for SCORE, a national nonprofit business mentoring organization for small businesses, Jeanne Rossomme, provides a number of tips for setting up your marketing budget. One in particular, we cannot stress enough:

Dedicate about 10% of revenue to marketing and sales. Many companies (according to a recent survey by the CMO Council) spend quite a bit less than this figure with 16% of companies spending between 5-6% of revenue on marketing, with 23% spending over 6%. But marketers of new products often invest 20% of projected revenues for launch. So, in general for a relatively new and growing business budget, allocate about ten percent of revenue to marketing, with half of that amount spent on labor – either your internal staff or external marketing firms.

Read the original post at SCORE.org

From the Small Business Administration, SBA, these words of wisdom:

… many small businesses don’t allocate enough money to marketing or, worse, spend it haphazardly.

Products and services don’t sell themselves. By ignoring marketing until it’s too late, many small businesses risk hitting a brick wall and, quite possibly, failing. A hip and trendy product line shouldn’t rely solely on ongoing product investment and word of mouth.

As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).

This percentage also assumes you have margins in the range of 10-12 percent (after you’ve covered your other expenses, including marketing).

If your margins are lower than this, then you might consider eating more of the costs of doing business by lowering your overall margins and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.

Read the original post at SBA.gov

Lastly, take a tip from Ramon Ray, Small Business Evangelist for Infusionsoft, Technology Evangelist for Smallbiztechnology.com, best-selling author of The Facebook Guide to Small Business Marketing, and recent guest on LGK’s The Marketing Mojo Show. In the two-minute audio clip below, Ray succinctly states an important benefit of budgeting for marketing.