Local businesses face fierce competition these days. Standing out and reaching their target audience effectively is often a challenge. One key element that can significantly contribute to their success is the development of a well-planned marketing budget. This guide will dive into the importance of creating a marketing budget for local businesses, highlighting the need for research, goal setting, and cost tracking to achieve maximum results.
Why Small Local Businesses Need a Marketing Budget
Developing a marketing budget is essential for small local businesses as it provides a strategic roadmap for their marketing efforts. Without a budget in place, businesses may find themselves overspending, lacking direction, or missing out on valuable opportunities. In addition, by allocating resources effectively, businesses can optimize their marketing efforts and generate a higher return on investment (ROI).
Researching and Setting Goals
Before diving into budget planning, it is crucial for local businesses to conduct thorough research. This includes understanding their target audience, analyzing market trends, and evaluating competitors’ strategies. Armed with this knowledge, businesses can set realistic goals that align with their overall business objectives. These goals serve as a compass, guiding decision-making processes and ensuring resources are allocated strategically.
Tracking Costs and Allocating Resources – How Much Should My Marketing Budget Be?
Tracking costs is a fundamental aspect of managing a marketing budget. By monitoring expenses and analyzing their impact, businesses can make informed decisions about resource allocation. Using accounting softwares, such as Quickbooks, and other budget tracking tools helps simplify this process. However, deciding on how much you should budget to marketing is often a difficult decision.
So, how much should a local business allocate to their marketing?
It is recommended that local businesses allocate a certain percentage of their revenue to marketing and advertising. For example, the U.S. Small Business Administration (SBA) suggests spending 7% to 8% of gross revenue on marketing initiatives. However, the specific allocation may vary depending on the industry and business goals.
This percentage varies by industry, by start up vs. established businesses, and due to other factors. However, we have seen 3% to 10% being common, while some are in the 12% to 15%+ of gross revenue being used for marketing. Here’s a quick guide to help, based on various revenues and percentages:
| Gross Revenue | 3% Budget | 5% Budget | 7% Budget | 10% Budget | 15% Budget |
|---|---|---|---|---|---|
|
$250,000 |
$7500/yr or $625/mth |
$12,500/yr or $1041/mth |
$17,500/yr or $1458/mth |
$25,000/yr or $2083/mth |
$37,500/yr or $3125/mth |
|
$500,000 |
$15,000/yr or $1250/mth |
$25,000/yr or $2083/mth |
$35,000/yr or $2916/mth |
$50,000/yr or $4166/mth |
$75,000/yr or $6250/mth |
|
$1,000,000 |
$30,000/yr or $2500/mth |
$50,000/yr or $4166/mth |
$70,000/yr or $5833/mth |
$100,000/yr or $8333/mth |
$150,000/yr or $12,500/mth |
What Type of Marketing Should Budgets Be Used On?
Small local businesses should consider allocating their marketing budget to a variety of channels and strategies to maximize their reach and impact. Here are some key types of marketing that can benefit small local businesses:
-
Digital Marketing: In today’s digital age, digital marketing is essential for local businesses. It encompasses various online channels such as search engine marketing (SEM), social media marketing, content marketing, email marketing, and display advertising. Also, digital marketing allows businesses to target specific demographics, engage with their audience, and measure the effectiveness of their campaigns.
-
Search Engine Optimization (SEO): SEO focuses on optimizing a business’s website to improve its visibility in search engine results. By incorporating relevant keywords, creating high-quality content, and enhancing website structure, local businesses can increase their organic traffic and attract potential customers actively searching for their products or services.
-
Social Media Marketing: Social media platforms like Facebook, Instagram, Twitter, and LinkedIn provide opportunities for businesses to connect with their target audience and build brand awareness. Additionally, through engaging content, targeted advertising, and community management, local businesses can foster meaningful relationships with customers and drive traffic to their websites or physical locations.
-
Content Marketing: Content marketing involves creating and distributing valuable, relevant, and consistent content to attract and retain customers. This can include blog posts, articles, videos, infographics, and more. By offering informative and engaging content, businesses can position themselves as industry experts, build trust with their audience, and drive traffic to their website.
-
Local Advertising: Local businesses should consider investing in advertising methods that specifically target their local audience. This may include traditional advertising mediums such as print ads, radio spots, billboards, or sponsoring local events. Local advertising helps businesses increase brand visibility within their community and reach potential customers who may not be actively searching online.
-
Online Listings and Directories: Ensuring accurate and up-to-date listings information on online directories, review sites, and map services like Google My Business and Yelp is crucial for local businesses. Therefore, these platforms help businesses appear in local search results, gain credibility, and encourage customer reviews, which can significantly impact their reputation and attract new customers.
-
Referral Programs and Word-of-Mouth Marketing: Encouraging satisfied customers to refer their friends and family can be an effective and cost-efficient marketing strategy. So, offering incentives or loyalty programs can incentivize customers to spread positive word-of-mouth, leading to increased brand awareness and customer acquisition.
It’s important for small local businesses to evaluate their target audience, industry, and goals to determine the most suitable marketing mix for their specific needs. Also, allocating budget strategically across these various marketing channels can help businesses maximize their exposure, attract new customers, and drive growth.
Benefits of Digital Marketing Services
In today’s digital era, digital marketing services offer numerous advantages for local businesses. They provide cost-effective solutions to reach a wider audience, enhance brand visibility, and generate measurable results. With targeted online campaigns, businesses can engage potential customers, drive website traffic, and boost conversions. In addition, digital marketing strategies, such as search engine optimization (SEO), social media marketing, and content marketing, can deliver a higher ROI compared to traditional marketing methods.
Developing a well-planned marketing budget is a crucial step for small local businesses looking to thrive in a competitive market. By conducting thorough research, setting goals, and tracking costs, businesses can allocate their resources effectively and maximize their marketing efforts. Finally, embracing the benefits of digital marketing services can further amplify their success, ensuring optimal ROI and business growth.
Ready to use your marketing budget to dominate your local market and increase sales? Schedule a free consultation today or get your free marketing analysis to get started!
