AllBusiness.com
    • Starting a Business
    • Career
    • Sales & Marketing
    • AI
    • Finance & Fundraising
    • M & A
    • Tech
    • Business Resources
    • Business Directory
    1. Home»
    2. Finance»
    3. How to Create a Marketing Budget Plan»
    Small business owner doing budgeting for marketing

    How to Create a Marketing Budget Plan

    Larry Alton
    Accounting & BudgetingAdvertising, Marketing & PRFinanceSales & MarketingSales

    It doesn’t matter if your business is a startup stage or has been around for years, a marketing budget isn’t optional. It allows you as a business owner to see how much money you are spending, where you’re directing your efforts, and how much money you have on hand. More specifically, according to Jessica Lucas, a marketing budget:

    • Provides a clear direction for your marketing strategy
    • Helps allocate financial resources for more effective spending
    • Provides tangible goals to strive for
    • Helps coordinate different business departments
    • Maximizes your marketing ROI

    The intimidation factor causes many small businesses to shy away from budgeting. Some business owners worry that a budget will reveal something they don’t want to see, so they put it off and take an “ignorance is bliss” approach. But this is no way to run a business.

    “Without budgets your company has no goals for which to measure itself against,” says business consultant David Gabbert. “There is no accountability for anyone within the company, including management.”

    How to create a marketing budget

    Budgeting can be complex, but here are some general tips and tricks to make sure you get started on the right foot:

    1. Establish a baseline

    “The first step to creating a solid marketing budget is to get organized about your current financial situation,” says entrepreneur Dave Lavinsky. “When you are working around estimates, it is impossible to create a realistic marketing budget.”

    To establish baseline figures, you need to know how much money your business is bringing in on a monthly basis. Since this figure is often quite variable, it’s best to run your calculations based on what Lavinsky calls “reliable revenue.” This is the minimum amount of money your business makes each month. (If your monthly income ranges from $8,000 to $10,000 per month, reliable revenue is $8,000.)

    2. Set aside the right amount

    Most businesses determine their marketing spend by taking a percentage of their gross revenues. While it depends on a number of factors—including the size and stage of your business—you’ll likely find that 2 to 5% of gross revenue is ideal for marketing.

    Businesses in the startup stage generally spend more than those that are well established. Play around with the numbers and see what works for you.

    3. Investigate funding options

    There’s a common phrase that says “it takes money to make money,” and anyone who has been in business long enough knows this is true. If you find yourself in a situation in which you need more cash to fund marketing expenses in order to drive revenue, it’s imperative that you understand your options and budget accordingly.

    One way to ensure you always have the cash you need to keep your marketing on target is to secure a revolving line of credit. This gives you access to cash any time you need it, and repayment terms are flexible compared to traditional bank loans.

    It’s also a good idea to keep an emergency fund of marketing expenses in place so that you can self-fund through dry periods. A good rule of thumb is to set aside enough to cover three to six months worth of expenses.

    4. Analyze and adjust as needed

    A marketing budget isn’t something you set in stone and then forget about; successful businesses recognize the variable nature of marketing and revise their budgets regularly.

    Not only should you analyze and measure the efficacy of your budget from time to time, but you should also adjust your allocated funds if you notice that something is misaligned or imbalanced.

    Budgeting isn’t the sexiest topic. While it’s more fun to talk about the creative aspects of marketing—like design, content, and slogans—you won't be able to do any of these other things if you fail to properly budget for them. Put your priorities in the right order and everything else will naturally come together.

    Hot Stories

    Concert contributing to small business growth

    How Major Concerts and Sports Events Drive Small Business Growth

    The process of signing the US Declaration of Independence July 4, 1776 on a dollar bill

    The Top 10 Historic Moments in American History According to AI

    Profile: Larry Alton

    Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. In addition to writing, he’s also active in his community and spends weekends volunteering with a local nonprofit literacy organization and rock climbing. Follow him on Twitter and LinkedIn.

    BizBuySell
    logo
    AllBusiness.com is a premier business website dedicated to providing entrepreneurs, business owners, and business professionals with articles, insights, actionable advice,
    and cutting-edge guides and resources. Covering a wide range of topics, from starting a business, fundraising, sales and marketing, and leadership, to emerging AI
    technologies and industry trends, AllBusiness.com empowers professionals with the knowledge they need to succeed.
    About UsContact UsExpert AuthorsGuest PostEmail NewsletterAdvertiseCookiesIntellectual PropertyTerms of UsePrivacy Policy
    Copyright © AliBusiness.com All Rights Reserved.
    logo
    • Experts
      • Latest Expert Articles
      • Expert Bios
      • Become an Expert
      • Become a Contributor
    • Starting a Business
      • Home-Based Business
      • Online Business
      • Franchising
      • Buying a Business
      • Selling a Business
      • Starting a Business
    • AI
    • Sales & Marketing
      • Advertising, Marketing & PR
      • Customer Service
      • E-Commerce
      • Pricing and Merchandising
      • Sales
      • Content Marketing
      • Search Engine Marketing
      • Search Engine Optimization
      • Social Media
    • Finance & Fundraising
      • Angel and Venture Funding
      • Accounting and Budgeting
      • Business Planning
      • Financing & Credit
      • Insurance & Risk Management
      • Legal
      • Taxes
      • Personal Finance
    • Technology
      • Apps
      • Cloud Computing
      • Hardware
      • Internet
      • Mobile
      • Security
      • Software
      • SOHO & Home Businesses
      • Office Technology
    • Career
      • Company Culture
      • Compensation & Benefits
      • Employee Evaluations
      • Health & Safety
      • Hiring & Firing
      • Women in Business
      • Outsourcing
      • Your Career
      • Operations
      • Mergers and Acquisitions
    • Operations
    • Mergers & Acquisitions
    • Business Resources
      • AI Dictionary
      • Forms and Agreements
      • Guides
      • Company Profiles
        • Business Directory
        • Create a Profile
        • Sample Profile
      • Business Terms Dictionary
      • Personal Finance Dictionary
      • Slideshows
      • Entrepreneur Profiles
      • Product Reviews
      • Video
    • About Us
      • Create Company Profile
      • Advertise
      • Email Newsletter
      • Contact Us
      • About Us
      • Terms of Use
      • Contribute Content
      • Intellectual Property
      • Privacy
      • Cookies