Small Business Advice | LGK Marketing Matters Blog

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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.

Do you budget for marketing or are you Keeping up with the Kardashians? Feel free to share your thoughts in the comments section of this post.

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GB O’Brien
LGK Marketing Communications Collective

Serve up a Good Pitch! Photo credit: Lauryn McDowell via Flickr under Creative Commons license

Not everyone connects with a good pitch. In baseball, that’s the point, right? On the other hand, in business, that’s a lesson learned by a North Carolina entrepreneur who appeared on the ABC hit television show, Shark Tank. Despite a unanimous “Great pitch, but I’m Out” on the investment opportunity, the Sharks’ refusal to bite did not derail the passion of Julie Busha, owner of Slawsa, a condiment product (ironically, in another episode, the Sharks bit on a good pitch and the business, Lipstick Remix, failed). Nor did their decision derail the marketing momentum of the product, which is currently available in more than 6,000 retail locations throughout the United States and Canada. In a post-show article, Julie shared a few small business takeaways from her out-of-the tank experience that are well worth repeating here:

Surround Yourself with the Best. …You can make your life easier if you surround yourself with the best. We live in a day of technology where outsourcing can be more effective than hiring within, especially if you’re small. But believe me, you’d rather be the quarterback who understands the game and can call the plays versus having three guys who sit on the bench.

Quality surpasses quantity every time, and making wise decisions to align yourself with the best will help your business run efficiently.

Never Let Someone’s Inability to See Your Value Determine Your Worth. …Success is not defined as making a deal on Shark Tank. Believe it or not, the voice of America reigns louder than that of any Shark, and those are the voices that matter most.

Read the article at Huffington Post.com

Back to the pitch. There’s brewing debate on the merits of company/elevator pitches. On a recent episode of LGK’s The Marketing Mojo Show, Sue Baroncini-Moe, business/marketing strategist and author of Business in Blue Jeans: How to Have a Successful Business on Your Own Terms in Your Own Style, states that elevator pitches become “weird practice speak” and generally she does not believe in them. Instead, Baroncini-Moe prefers and recommends having a conversation to position what you do and the value of what you do in a context that is relevant to the person with whom you are speaking. Flip the script, practice speak or not, entrepreneurs and small business owners should embrace the process of describing their business, the vision, solutions and target market(s) as a marketing opportunity and to maintain focus. Whether you call it an elevator or company pitch, value or purpose statement, our advice to you is to not launch or leave the office without a succinct summary that conveys your business value and benefit. That’s the basis of a good pitch.

Do you have an elevator pitch; do you think it is necessary? Feel free to share your thoughts in the comments section of this post. In the meantime, here’s the Shark Tank episode featuring Julie Busha of Slawsa (about 11 minutes, 30 seconds into the video).