Confused About How Much To Spend On Marketing? Here's A Foolproof Method To Budget Effectively To Keep Growing Your Business

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Budgeting based on your “gut feeling” is a dangerous path that no one should be on.

Unfortunately, many business owners invest in their marketing this way. They continue to spend money on what feels right to them and hold on to the thought of “this time will work”, crossing their fingers and wishing that what they invest in will generate the return they want.

But how often do you actually get the results you expect when you’re simply throwing away a marketing budget based on gut feeling? Probably never.

It’s time to finally stop following your gut feeling when it comes to money, so you can feel assured and clear on where and how much you’re spending to grow your business. So, how should you budget for marketing? Here’s a 5-step method that shows you a clear picture of what your marketing budgeting strategy should look like. 

Step #1. Stop borrowing from the future

Many entrepreneurs borrow the money they don’t yet have for marketing. They overspend or use the budget they need for operations and other important areas by assuming that this marketing investment will eventually bring them the return they want and cover their initial investment.

However, this is especially risky if you are at the beginning of your business. Unless you have past statistics and data that assure you that you will make your money back, you should allocate a budget from the sales and revenue you’ve already earned. Not from the sales you “think” you’ll make if your marketing works later.

Step #2. Allocate your revenue for marketing

Set aside a percentage of your revenue for marketing on an ongoing basis. This way, you are earning your marketing budget as you get more sales, and you also have more marketing budget as your business grows.

This should be a percentage that you feel comfortable with and that still allows you to cover all other expenses, including your own salary, in your business. This percentage may vary among industries and different businesses, so adjust it as you move forward depending on what works for you. If you’re starting out, you can try 10 to 12% to begin with.

Step #3. Categorize your marketing expenses

Make a list of the types of all marketing expenses you are spending and will spend on, and organize them into categories such as online platforms, subscriptions, website, business cards, collateral, automation tools, advertising, partner outreach, influencer marketing, and gifts and samples, etc.

This allows you to see all the different areas where you are investing your marketing budget.

Step #4. Allocate for each type of expenses

Figure out how much you need to budget for each type of marketing expense, and assign a percentage to each category. They should add up to 100%. If you’re starting out, prioritize the most important marketing efforts first, then make changes and include different types of marketing expenses as you grow and have more cash on hand later.  

Step #5. Apply this system regularly

Allocate your revenue on an ongoing basis towards marketing using the percentage you came up with in Step #2. Next, distribute this total marketing budget among the different types of your marketing expenses using the percentages from Step #4.

For example, let’s say your total marketing budget is 10% of your revenue, and you have 5 categories of marketing expense - online platforms, website, automation tools, advertising, collateral with the percentage of 25%, 15%, 15%, 25%, and 20%, respectively.

If you made $3000 in revenue, you would set aside 10% which is $300 as your marketing budget. Of the $300 total marketing budget, you would distribute it across the 5 categories, which would be $75, $75, $45, $45, and $60. 

Remember, as you grow your business, you will have different marketing needs. So, make sure you adjust these percentages accordingly so you can keep growing and expanding the amazing work you do and your business!

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Join me at our FREE training, so you know how to grow your profitable brand people love AND a loyal customer community who keep buying from you!