Having a well-defined marketing budget is crucial for the success of any business. Without one, you not only risk under-spending/over-spending, but you might also be at a risk of burning cash too soon.
Have you ever wondered how to manage my marketing budget or to be more precise what should my marketing budget be?
This insightful blog is written to help one understand how to plan his/her business the right way and use it as a marketing budget template to structure his/her marketing activities before taking the entrepreneurial plunge.
This plan holds good regardless of whether you are pursuing a B2B, b2b, b2c, selling products, services or coaching programs.
How does a marketing budget look?
Marketing budgets of million-dollar businesses look typically like the one shown above. However, if you are into something like drop shipping or specific niche business, the allocation percentages may vary.
This structure can be used as a baseline to plan your business activities.
Having a well-cushioned marketing budget of 20 to 30 percent of your total investment helps you make the right decisions that are important for your company’s growth pipeline.
Use your marketing budget template to spread and allocate your cash into the following mediums.
- Online Marketing
- Offline Marketing
- Print Media
- Radio (If applicable)
Next, in line, come the operational activities of a business. It is advisable to keep aside a minimum of 10% of your monthly revenues for your operational expenses.
Your operational expenses could include taking care of your regular business needs such as:
Cost of Goods/Service Staff
This segment plays a crucial role in keeping your business well oiled and ideally consumes 35% of your business expenses. Basically, this is the segment responsible for contributing profit-making activities directly/indirectly to your business.
If you are someone who is into the product industry, your expenses could be spread across
- Capital goods
- Raw material
- Equipment and Machinery
- Shipping and Transportation
- Product Development
If you are in a service related business, your expenses could be spread across
- Expert Contractors
Large businesses ideally keep aside 15 percent of their monthly revenues to take care of their day to day business needs.
Now, daily business needs could be anything from regular customer support to having a receptionist answer your visitors. However, if you are someone who is just starting out, you could tune your backend operation costing in sync with the next crucial segment of your business.
20% of your business revenues can be taken in as a profit. However, as we have earlier discussed, should you find your profits leaning towards the lesser side and you feel the need to increase your business profits, you can tune your backend operational activities.
Looping back to our first segment, that is, marketing activities, one could essentially rely on two major marketing segments to keep the business machinery well-oiled.
The two essential marketing segments are
- Paid Marketing
- Organic Marketing
Of the 20% marketing budget that you keep aside towards marketing activities, one should ideally spend about 70 to 80 percent toward paid marketing activities.
Paid marketing could involve spending money on online advertising or getting your business flyer/brochure done through an expert or advertising your business offerings on other offline media.
Organic marketing could essential take 20 to 30 percent of your overall marketing budget to spread the information about your business through word of mouth marketing, loyalty programs or organic traffic.
Marketing Budget Template: Is it important to have one?
Having a marketing budget template is an absolute necessity. It not only answers your common questions such as how to manage marketing budget or what should my marketing budget be, it rather helps in fuelling the remaining 80% of your business.
Back here at GrowthLABS, we have been able to generate $5 or every single dollar spent through careful analysis and strategically spreading our marketing activities.
Feel free to get in touch with us and do share your thoughts and comments by commenting in the comment section below.