How much should you spend on marketing in your small business? That depends on a number of factors, including how much you want to grow your business, how much competition you face, and how easy it is to reach your target market.
A small business marketing coach can help you define your target market, set a marketing budget, develop and implement a marketing plan, test and track your marketing results, and much more!
In general, though, the answers to the questions below will influence how much you need to spend on marketing, in terms of both money and time.
How Much Do You Want To Grow Your Business?
The more you want to increase revenues, the more you will need to spend on marketing. In the start up phases of a business, in particular, you’ll need to invest heavily in marketing as you fill your marketing funnel (from interested prospects to closed sales).
Can You Retain Your Existing Customers Or Clients Without Continually Marketing To Them?
If you can easily maintain your current level of business, and you don’t want or need to grow, you won’t need to spend much on marketing. Don’t get too complacent, though. Most businesses lose some business every year, so you’ll need to make up for that attrition by finding new customers or clients.
What’s The Average Amount Of Your Initial Sale?
If the average amount of your initial sale is high, you’ll be able to afford to spend more on marketing.
Do You Get Reorders After The Initial Sale?
Even if your initial order isn’t very bid, if you receive reorders, and the average lifetime dollar amount of each account is healthy, you can afford to spend more on marketing.
How Much Does Your Business Benefit From Word-Of-Mouth Referrals?
If your business benefits from word-of-mouth referrals, you can attribute that new business to your original marketing efforts and afford to spend more on marketing. For example, if the average customer or client spends $3,000, and for every three customers you get one new referral, then the total amount of those sales would be $4,000.
Is It Easy To Identify And Reach Your Target Market?
The easier it is to identify and reach your target market, the less you’ll need to spend on marketing.
Is Your Product Or Service Unique?
If your product or service is unique, the good news is that once you find a new customer or client, they’ll probably stay for a long time. The bad news, however, is that it can be extremely expensive to market a product or service that few people know exist. How can people look for or ask for something they’ve never heard about? The process of educating people or businesses – through marketing – can be expensive and time-consuming.
Are You Rolling Out New Products Or Services?
If you’re rolling out new products or services, to ensure a successful launch, you’ll need to spend more on marketing.
Have New Competitors Come Into Your Market And/Or Have Existing Competitors Stepped Up Their Marketing Efforts?
If you’ve been in business for awhile, you might not have needed to spend much on marketing. But if new competitors appear, or existing competitors become more aggressive with their marketing, you’ll need to step up your efforts to simply maintain your piece of the pie.
Have There Been Significant Changes In Your Industry?
If significant changes have occurred in your industry – positive or negative – your business could be affected by those trends. If it’s a negative trend (such as bad publicity), you’ll want to counteract it. If it’s a positive trend (such as target market expansion), you’ll want to capitalize on it.
Bottom line about marketing: You’re never quite able to not spend anything. And depending on your market, industry, and competition, you might need to budget quite a bit for marketing. The beauty of successful marketing, though, is that you’ll always get a return. A small amount could help you retain clients and/or get more business from them. A big amount of marketing could help you start or grow your business, successfully break into a new market, even change the world!
For further information on how much marketing you should spend, talk to a small business marketing coach! Schedule a free consultation with one of our small business marketing coaches, or e-mail firstname.lastname@example.org.
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