This season, I’m discussing the marketing errors I committed with my first startup in the hopes that you can learn from them as well as from my subsequent interactions with other business owners.
While I was working at my first startup, I was unaware of this error. But as a marketing consultant who works with other business owners, I’ve found that a lot of individuals make this mistake. Not having a clear marketing budget for your small business is the error I’m referring about.
Let me begin by giving my own experience: after reflecting on my startup, I discovered that less than 1% of my budget went toward marketing. And, as you may know, marketing is what draws attention to you. People learn about what you do, what you sell, and how it could benefit them from it through it. Additionally, if you don’t spend enough, the correct audience won’t hear your message. Your sales will be impacted by this, of course.
Why do business owners fail to create a marketing budget?
Due to the fact that marketing is intangible in the short term, many business owners do this error. The immediate aspects of your business that you can see or measure are the tangible components. Considerations include things like operations, staff compensation, raw material expenses, how much raw material you’re buying, and what tools you’re investing in. Unfortunately, because it takes time for your message to reach your customer, marketing is not highly measurable in the short term. As a result, many business owners give up on marketing too quickly because they get no results.
In the first few years, you should allocate 20% of your overall budget to marketing because that’s when you’ll need it the most to build your brand awareness, according to Harvard Business School research. You can lower it to 8 to 12% once you’ve gotten comfortable and generated enough sales. If you spend less, though, it will take a lot longer for your message to get to its target demographic. Additionally, if your company is tiny, the longer it takes, the more money you will have spent on real expenses like operations, salaries, raw material purchases, and so forth. As a result, you won’t be able to produce enough sales and may feel like giving up if you spent too much time on other tasks and not enough on marketing.
I’m telling you this because it actually did happen to me. I want you to know that this is a regular event for many startups because I’m an entrepreneur. Because of this, many firms fail during the first one to five years of operation. Be mindful that your company’s long-term performance will be impacted if you don’t invest enough time and effort in your marketing.
What should your marketing budget be?
The next thing to think about is how to determine how much money you should spend on marketing now that you are aware of how crucial it is. I did indicate that you may spend between 8 and 20 percent, but it was only a suggestion. Furthermore, you might not be able to invest that much if your company is little.
So how do you calculate your spending limit?
I strongly advise creating a plan for the marketing activities you wish to undertake.
You could wish to use marketing to target the channels that interest you. You might be active on Facebook and Instagram, so perhaps there is where you want to concentrate your efforts. As an alternative, you might choose to use Google AdWords to draw traffic to your website. Or perhaps you’d want to do an entirely offline task, such as attending a networking event or renting a booth at the right event. You must choose whatever is best for your business. What marketing outlets do you think will help you make sales?
You can start budgeting for it after you have a firm idea of where you want to travel. And it’s amazing if you already know how much something will cost thanks to prior experience. Otherwise, the Internet is a great resource for finding all of this information.
Thus, that is one way to determine how much money you will need to spend on marketing. Another choice is to evaluate your marketing spending plan and decide on a level of spending that you can maintain over the next few months. For instance, I agreed to spending 5000 on marketing each month, and I honor that commitment. Additionally, I test out new things once a month to see how they function. So, for a month, I experimented with Instagram promotions, spending my entire marketing budget on them to see what outcomes I would receive. Was it making me more conscious? Was it bringing me more customers or fans? The results were analyzed once I switched to a different channel the next month, like Facebook ads.
You might also buy non-digital products with your money. For instance, I recruited a three-month intern whose sole duty was to help me develop marketing materials. And that is how I used the three months’ worth of my marketing budget. It’s not always required to design a particular marketing campaign. You can engage a visual designer to create all of your marketing materials, including as brochures, business cards, websites, social media accounts, and anything else that aids in marketing, for a period of two or three months. Spend that money on promotion, and throughout the upcoming months, stay under your budget. This will help you maintain a constant emphasis on marketing. When you do this, you’ll constantly be considering marketing, and after approximately six months, you’ll know more about what worked and what didn’t. With time, you’ll be able to choose whether or not to concentrate on particular channels and you’ll know more about how much to invest in them.
Even though creating a marketing budget is simple, many small business owners fail to do it. Your small firm must clearly identify its marketing budget if you want to concentrate on marketing. I hope I’ve provided you some advice that you may utilize to get started if you haven’t yet created your marketing budget.