Small Business Advertising CostsAdvertising costs for small businesses
Determine a marketing budget that meets your business objectives and offers a high return on investment.
No matter whether you run a small business or a multi-million dollar business, your business needs your brand to grow and grow. But many small companies don't pay enough to market their products or, even worst, they just do. Recently I met a company that invested a lot in the development of a trendy alcove in order to expand its already very trendy line.
It quickly became clear, however, that developing the products had taken place in a hopper, while distribution and merchandising were doing their own thing. Last weekend the company was on the table with a great item, but there was no release schedule or promotion materials for the new one.
Panicked, an costly PR company, a philanthropist and a marketer were called in to raise public profile for the new products. In a matter of a few short days, the company's budgets had dried up and it needed to quickly rethink its overall operations, distribution and market strategies, while staying ahead of the game.
If they ignore it until it is too late, many small companies run the chance of colliding with a barrier and, most likely, fail. How much should you devote to your merchandising? How can you dispense it well? A lot of companies assign a share of real or forecasted revenue - typically between 2-3% for run-re-rate marketing and up to 3-5% for start-up marketers.
However, the actual distribution will depend on several factors: the sector in which you operate, the scale of your business and its period of expansion. In the first few years of establishing a successful franchise, retailers are spending much more money on advertising than other companies - up to 20 per cent of turnover. Typically, small companies with less than $5 million in revenue should use 7-8% of their revenue for targeted advertising.
These budgets should be divided between 1) your cost of developing your business (which covers all the different ways you use to support your business, such as your website, blog, promotional materials, etc.) and 2) the cost of supporting your business (campaigns, advertising, promotional activities, etc.). Also, this percentile is based on your margin assumption of 10-12 per cent (after covering your other spending, as well as marketing).
When your profit margin is lower than these, you might consider consuming more of the cost of doing business by reducing your overall profit margin and incurring extra expenditure on your own market. It' a difficult decision, but your market should never be built on what is available once all other business costs are recovered.
Understanding how much you have to pay for your advertising is crucial; more importantly, how you do it. That means having a blueprint. A small business market ing-budget should be a part of your market ing-plan and should outline the cost of how you will meet your market objectives within a specific time frame.
Has your company a marketingtable? See how you can reduce your advertising budgets and build your brands profitable. As soon as you have your own market planning and your own budgets, keep in mind that they don't have to be set and rigid. By the end of the afternoon, it's more important to know if your spend will actually help you reach your market objectives than to stick to your budgets.
Do you have a schedule to measure your expenses and the effect that activity has on your bottom line? First of all, be patient and track all your promotional activity throughout the company - it needs a small community to develop a franchise and thrive. At least once a year, you should maintain and review your planning when launching a new product/service or when the business environment changes.