How to Create a Sustainable Marketing Budget
At any point in your entrepreneurial journey, you may be looking to evaluate your marketing strategy and grow your business. There’s a growing number of viable marketing channels and strategies that pop up every year, but with so many options, it can be a little stressful to figure out which option to choose, and how to allocate funds.
Since there’s no one-size-fits-all strategy, let’s discuss how you can determine the right budget, choose between the various marketing channels that are available, and find a way to track your success.
Determine your margins
Before starting any marketing campaign, it's important to stay cost-conscious, especially for businesses just getting off the ground. To start with, you’ve likely already established the fixed costs of operating your business.
Fixed costs can include common overhead aspects such as rent, insurance, or labor, but to establish a healthy profit margin for your business, you’ll need to figure out variable costs as well. Variable costs include raw materials, cost of goods sold (COGS), and marketing campaigns.
Profit margins can vary, but generally, the more volume your business brings to market and the more you sell, the more leeway you can have with your margin.
Larger companies can operate under much smaller margins due to the scale they bring to the marketplace. For smaller operations, especially service-oriented businesses that rely heavily on selling time, it’s important to aim for a profit margin between 30-50%.
Define your target audience
Part of creating a marketing plan has to do with t identifying which consumers your product or service will attract. If you already have a business running, you can look into your business analytics using your eCommerce platform, social media insights, or tools like Google Analytics.
New businesses can use market research to see who is engaging with products or services similar to theirs. With this knowledge, you can begin to focus on which marketing channels are worth exploring and how to position your brand within the appropriate physical and digital spaces.
Use free marketing tools
Word of mouth
Friends, family, neighbors, personal networks, and networking groups with colleagues in your industry are some of the best ways to let people know what you offer. You can implement this marketing tactic by sending a simple text to people you know and look into virtual or in-person networking groups.
Having a strong social media presence can give you the opportunity to tell your story, get creative, and showcase your offerings. It’s also completely free to get started!
While claiming a social media handle and setting up your account can be quick, you’ll have to put in the work of creating engaging posts, making videos, writing thoughtful captions, and coming up with content that explains your product.
Start by creating a month’s worth of content including photos, captions and hashtags. You can also look into automating your socials with tools like Hootsuite. Software like Hootsuite allows you to create calendars, access your messages from multiple social accounts, schedule posts and much more. Software-managed social media platforms such as Hootsuite, HubSpot or Sprout Social have multiple subscription levels ranging from $49 - $250/month for small businesses but can range into the $1000’s/ month for corporations. The platforms above all have free trials so it’s worth looking into a few to see what platform may work best for you.
Be sure to add your business location to your social media profiles as a way of letting your potential customers know where they can find you. You can also lead customers to specific pages on your site with tools like Later’s Link in Bio feature. With your social media channels in place, you’ll gain access to your analytics and updates on who is engaging with your content.
Remember to be persistent and don’t get discouraged from posting if your socials aren’t gaining followers or likes within the first few months. Social media algorithms can make it tough to get noticed without paying for ads or boosting a post – but don’t give up! If you’re not ready to dedicate funds to paid ads right now, it’s worth educating yourself on best ad practices and when to post content.
Use ad credits
Google, Yelp, and other similar platforms offer free ad credits to new profiles as an incentive. Taking advantage of these offers means you’ll get to utilize their tools, gain insight into your target audience, and help you determine if a platform might be a good fit for ongoing lead generation for your business.
Submit to business directories
All businesses should submit their location and business details to Google so you can be part of the Google My Business program. However, don’t limit yourself. Take advantage of other kinds of directories as well such as Yelp, Linkedin, and Apple to name a few.
This not only helps customers find you locally but submitting your business address to business directories also grants you more exposure. If your business has a specific niche or it operates nationally, you can also utilize directories that are specific to your industry like Crunchbase, Clutch, and many others.
Choose a customer relationship management (CRM)
Customer relationship management (CRM) software platforms allow you to utilize their software up to a certain threshold and unlock additional features as you grow.
A CRM will help you combine all of your contacts and customers into one place where you can make notes, post updates, and improve communication. Most CRM platforms have built-in analytics systems that will help you determine your engagement rates as well as where your customers are finding your business and how far they are going in your sales funnel.
Using analytics to gain insight into customer behaviors
After using some or all of the tactics above you’ll have better insight into your target audience, like what products they’re interested in, average spend, most successful campaigns, and more. When you started your business you might have had an idea of your target customer, but after testing some campaigns you’ll have hard data on who your customer actually is.
Applying your marketing budget
Did word-of-mouth marketing work best for you? Look into pop-up business spaces or shared office spaces that can offer flexible terms and prepare you for potentially opening a brick-and-mortar store.
If your social media audiences engage with your content, look into taking a social media course that teaches you how to start investing a portion of your budget into your social channels. Facebook is a great place to start as a business!
The Facebook Ads Manager can help you boost your posts on Facebook and Instagram. You can even schedule a time to meet with a Facebook Ads expert free of charge. You should also explore advertising opportunities like TikTok or Snapchat.
If your ad campaigns are successful, start bidding on additional keywords. Remember that cost-per-click (CPC) advertising can vary by industry and keyword competition.
In addition to bidding on CPC ads, you might want to look into creating a blog to organically compete for terms associated with your brand products and services. This tactic is known as search engine optimization (SEO).
Tracking the success of your marketing campaigns
With paid marketing and tracking in place, you can also begin to see your customer acquisition costs (CAC). Each channel and product might have a different CAC, and those individual values can be added to your bottom line costs within your product margins.
As a small business owner, you might be wondering, “Why do I need all of this tracking?” The answer depends on what your goals are as a business. If you are looking to make profits and experience impressive returns on investment (ROI) quickly, your marketing budget and strategy will be different than a company that is solely focused on growth.
Having robust tracking and in-depth insight into your financial situation can also help you secure a business loan or attract investors. Additionally, a solid understanding of your company’s finances will come in handy if you ever plan to sell your business later on down the road.
Adjusting your marketing budget
Your marketing strategy should also be closely monitored and adjusted when necessary. If you are seeing success in one strategy, it is time to level up!
If a channel has fallen significantly, you’ll need to do some investigating and make changes to regain traction. There are times when a platform may no longer serve you, so funneling that budget elsewhere is a very common business practice.
Setting up your tracking and analytics early on will make marketing decisions somewhat easier because your plans and budget projections will be supported by data from the very beginning.
How much should you spend on marketing?
There’s no one-size-fits-all approach to marketing. Be aware that marketing channels and their effectiveness will change over time. Your business size and goals will affect your marketing plans greatly. So, paying attention to whether or not your techniques are working is a must. Monitor your business’s success and adjust according to analytics. Frequently changing your marketing plan is common in business, no matter the size of your company.