How to determine your marketing budget
As the end of the financial year looms, you may be planning for the year ahead, but a sometimes-bewildering factor at play is your marketing budget. How important is marketing? What is considered an appropriate amount to spend in the wider context of your business and its goals? Every business is different – we know that from the hugely varied customers we have across our business centres, all with varying aspirations, budgets and considerations. Here, we discuss how to decide what to spend on your SME’s marketing to ensure you maximise opportunities without over-investing.
Why is marketing so important?
However good your product is and however expert your team are at delivering for your customers or clients, if you don’t shout about your successes and show off your skills, your business growth will be limited. Word-of-mouth referrals are a fantastic, organic way to grow your business, but for a small business to grow exponentially, investment in marketing is vital.
Spend money to make money
There are some very simple formulas to decide how much is adequate to spend on your business’ marketing. The general rule is that your marketing budget should be between 2% and 5% of your revenue.
But every business is different, with different business models, goals and overheads. It is important to consider a suitable amount to spend for your company and how it may compare to what your competitors spend, or the average for your particular industry. For example, the hospitality industry on average spends 12% of annual revenue on marketing, so it can vary greatly.
Optimistic outlook
As business improves post Covid, this will hopefully mean that your revenue improves, so consider increasing your marketing budget accordingly. You’ll be in good company: Marketing Agency Topflight reports that over 60% of British businesses expect their marketing budget to increase in 2022.
Important considerations
It is also important to take stock of your immediate and long-term goals and how marketing will contribute to reaching those goals. If you are looking for aggressive growth primarily from new clients or customers in 2022, or are introducing a new product to your range, then factor in a larger investment in marketing.
Another point to note is the projected ROI you may be able to achieve with the allocated budget. Depending on techniques, platforms and materials needed to deliver, ROI can vary greatly. There are plenty of resources to help you decide on strategy, which platforms are best and which marketing styles suit your business aims best. Marketers Weidert Group recently shared a round-up of marketing strategies, which is a good starting point.
Planning into action
Once you have determined what you will be comfortable spending on marketing you will need to ensure this budget is spent efficiently, and in a way that best supports your business goals. Whether you are seeking external advice from a dedicated marketing agency or looking to spend the budget primarily on internal resources, clear objectives are vital to ensure you stay on track and can deliver on your marketing KPIs.
We wish all our valued Capital Space customers much luck with their marketing efforts in the year ahead and hopefully, with the advice offered above, deciding your marketing budget is less daunting! Capital Space provides flexible workspace across the southeast, perfect for growing businesses. Get in touch for more information.
To find out how Capital Space could benefit your growing business,
call 0800 107 4667 or email info@capitalspace.co.uk
Share this page
