How Much Of Your Business Budget Should Be Committed To Marketing?
When it comes to figuring out how much money to spend on marketing your business, there are a few things that need to be considered. The main variables that affect your decision will be time and money. The more time you spend on marketing to clients personally will usually mean that you will not have to spend as much money. Conversely, if you spend a little more money on marketing, you can usually save some time. Your marketing budget will also depend on what type of business you are running and what products you sell. Read on to learn how to determine the right marketing budget for your business.
Assessing Your Business and its Needs
There is no set formula for setting up the perfect marketing budget. You will need to consider the industry your business operates in and how customers are drawn to your products and services.
Business Maturity and Reputation
Older, more established businesses may not need a large marketing budget because they have developed a reputation in the marketplace and their products are already well-known.
Newer businesses will usually have to spend more in order to compete with these established businesses and their competitors. If you run a small local service business and most of your customers come from referrals or word of mouth, you can afford to spend less on marketing. Retail businesses or businesses that face a lot of competition in their industry will need to spend more.
Time is a Factor
As the saying goes, “time is of the essence.” No matter what kind of business you have, you will always need to spend time interacting with your customers and potential customers. According to experts like Elliott W Wislar, time is an important part of marketing and should also be included in the budget.
Profit Margins
It is important to consider how your business earns profit when determining how much to spend on marketing. Businesses that make a profit by selling high volumes of product with low profit margins will generally need to spend less on advertising. On the other hand, businesses that sell products or services with high profit margins can afford to spend more on marketing because the profit per sale is much higher.
Creating a marketing budget that allows for both steady profits and growth can be difficult for new business owners. If you need help coming up with the right budget for your business, contact a professional or someone who has been there before.
