Every successful business is built on a successful plan. And one of the most important aspects of your plan will be the marketing strategy. After all, if people don’t know about your business, they will never be able to pay for your goods or services.
As you strategize your marketing efforts, you’ll need to pay close attention to your budget. There are diverse ways to approach your marketing budget. One popular method is to let the expenses lead the charge. As you list out key marketing executions, you’ll keep a running tally of the cost. Then you take the total cost and adjust your budget to accommodate your chosen marketing efforts. This aggressive approach makes marketing a priority, sometimes at the expense of other aspects of your business.
An alternative way to approach your budget is by earmarking a percentage of your revenue for marketing. This approach is a more reactive way of handling your efforts, as your strategy will need to be reigned in any time revenue decreases. But this method helps contain costs and ensures that the other areas of your budget won’t be infringed upon by marketing expenses.
Regardless of your chosen budgeting approach, it’s important to understand the various expenses you should include in your budget.
“Marketing expenses are an important consideration for all businesses because marketing is a primary business function that creates a customer for the business,” explains a business finance report from the Houston Chronicle. “It’s critical for business owners to understand the significance of marketing expenses, its accounting definition, marketing expense management, and tax treatment.”
This guide will introduce you to many of the common marketing expenses that small businesses deal with. It’s not intended to be a comprehensive list. Each business has unique elements and needs.
- Online presence: You can’t operate a successful business these days without a website. Plan on expenses related to buying a domain, designing your website, and paying for hosting. You’ll also want to have a blog and multiple social media accounts. These channels are relatively inexpensive to create and operate, but there will be expenses related to the creation of content.
- Digital tools and technology: The costs associated with digital tools typically have a great ROI because of the precious time the tools can save you. But you’ll still need to account for expenses such as email platforms, project management software, accounting software, or customer relationship management systems.
- Research: The best marketing is always guided by data. Plan on expenses related to surveys, industry reports, focus groups, product testing, or magazine subscriptions. You can minimize these expenses by leaning to the digital side, where tools like SurveyMonkey allow you to conduct high-impact research without the hefty price tag.
- Advertising: The best advertising campaigns involve multiple media channels. Examples of possible expenses include display banners, TV spots, radio ads, direct mail, and print ads.
- Printed materials: This category can be a catchall for various printed pieces, such as business cards, catalogs, brochures, coupons, vouchers, or posters. Depending on your industry and location, these expenses vary significantly.
- Samples or gifts: One of the best ways to help someone understand the benefits of a product or service is to let them experience it firsthand. Consider allocating money for samples and gifts to lure customers to your business or reward their loyalty.
- Sponsorships: This approach allows you to connect your business with others in a way that attracts new customers. Affiliation is a powerful tool, so it could be worth the cost.
- Equipment: Accomplishing your marketing goals may require additional equipment. For example, if you’re taking product photos, you might want to invest in a quality camera. Or you might need tablets to use for presentations at trade shows or networking events.
- Promotional items: If this is a marketing strategy you plan to use, there will be expenses related to bags, shirts, pens, electronics, sunglasses, stress balls, or whatever else you plan to give away.
- Events: This category includes expenses such as flights, ground transportation, hotels, meals, registration fees, booth displays, and other necessary supplies. Depending on your industry, this category could potentially be a major component of your marketing budget.
- Public relations: You might want to enlist the help of communications experts in your marketing. A talented public relations expert comes at a premium cost, but if you use their skills to the fullest advantage, it can be worth it.
As you formulate your marketing budget, take special care to identify each expense that will fall within it. This thoughtful approach to finances allows you to track the impact of each marketing effort so you can determine the ROI and assess whether you want to keep it as part of your overall strategy.