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Setting Your Marketing Budget

Posted by: Rod Kurtz on November 3, 2008

Creating an effective marketing program means investing in it on an ongoing basis regardless of how good or bad business is.

Investing a percentage of revenues is a common way to determine how much to spend on marketing. Look at past years and project what you’ll do in sales for the coming year. Then, take a percentage (commonly between 7.5% and 10%) of that amount and dedicate it to marketing.

Next, determine how much of the total amount you will spend in each individual month. There’s no simple secret here, but you do need to know your customer buying cycles and when they are most apt to make their buying decision. Spending the same amount every month is probably not the best plan. As a general rule, spend your marketing dollars when customers are ready to make their buying decisions. Retail stores, for instance, spend a high percentage of their marketing budget during the end-of-the year holiday season. If you are a tax preparer, you’ll likely spend about 75% of your marketing budget between December and April, when people need your services the most.

The key to establishing a successful marketing plan is to have an actual plan (in writing) and establish specific dollar amounts to spend each month to support your business.

Gene Fairbrother
ShopTalk 800 Business Consultant
National Association for the Self-Employed

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