11.1 Introduction
Even though we would all love to be able to spend countless amounts of money on marketing, this is not possible in the vast majority of cases. Instead, budget restraints are real and this is something that has to be addressed as a successful marketer will be able to get the most out of whatever money is available, as long as they are sufficiently competent. However, in order to do this, it is important to have a good understanding of how to cope with the problem of budget restraints, as it is surprising how much can be achieved even with a relatively small amount of money.
11.2 Setting the Budget
First, we look at how you set the budget for your marketing because you need to remember that this should be an ongoing cost and not a one-off. The actual money allocated to your marketing cost is something that should form part of not only your marketing plan but also your business plan. If you have not included this in either of these two things, then there is going to be a problem. It is important to spend a considerable amount of time conducting research into what different types of marketing usually cost.
First, we look at how you set the budget for your marketing because you need to remember that this should be an ongoing cost and not a one-off. The actual money allocated to your marketing cost is something that should form part of not only your marketing plan but also your business plan. If you have not included this in either of these two things, then there is going to be a problem. It is important to spend a considerable amount of time conducting research into what different types of marketing usually cost.
For example
If you are planning on handing
out business cards, then what is usually the best price for say 500 of them to
be printed? If you can do this for one type of marketing then you can do it for
others. Consider also calling your local newspaper to find out the breakdown of
the different costs for various sections and advert sizes throughout the
newspaper. By planning ahead and doing your homework before committing yourself
to any type of marketing it will be easier for you to decide how much money can
be set aside for the budget in the first place.
In order to make a difference to your business it is necessary that you to carry out marketing on a regular basis. This means that you have to look at the budget on a monthly basis and this should be in any business plan. Initially, you should look at doing the same type of marketing, or at least the same amount each month, with the understanding that, if there is a positive reaction, then the additional turnover that occurs as a direct result of the marketing can be partly used to fund further marketing. This is something that should be included in the marketing strategy but, at the same time, there is also a need for you to consider the flip side whereby certain aspects of marketing have to be reduced if they are not producing the results that you had hoped to achieve. That is not to say that you need to then completely stop marketing as that would prove to be disastrous for your entire marketing and business strategy.
To make full use of your budget, you need to take the following points into consideration before you launch any campaign or strategy:
This has to be the starting point as it will give you some indication as to how much money to set aside to help with the marketing of your products or services. By consulting your business plan, or the company's business plan (if you are working in the marketing department for a company), it will help you to better understand the aims and goals that you need to work towards.
What time frame are we talking about?
Another important factor to take into consideration when dealing with the budget is the overall time frame, as it will impact how much money you are going to have to spend in order to reach those aims. It makes sense that, if you are trying to reach an end result in a shorter period of time, then you need to spend more cash in order to reach those goals; therefore understanding the time frame is more important than most people realize.
What kind of campaign is it?
It is important for you understand what your campaign entails as that has an impact on the budget. Are you attempting to attract as much attention as possible? How about 'testing the water' with a small campaign to get you noticed? Knowing the level of the campaign will have an impact on how much money you have to spend, so planning ahead will be key to setting an accurate budget. In other words, setting the budget involves you carrying out research into the cost of various types of marketing and how much you plan on doing on a monthly basis. Remember that marketing is something that has to be constant or you may find yourself being over-taken by your competitors; a problem that would need to be addressed as quickly as possible.
11.3 Preparing for Unexpected Extra Costs
We have discussed setting your
budget but there is a potential problem to recognise, which is unexpected extra
costs. It is impossible to predict when these extra costs can occur but you can
take certain actions to help in such situations. It is generally suggested
that, when preparing for extra costs within your budget, you set aside at least
10% more than initially planned. The upside of this being that you accrue extra
funds, should no unplanned costs be incurred.
The key to dealing with unexpected extras is very simple: expect them to happen. If you set aside some extra cash that will allow you to cover any extra cost and everything goes smoothly, it means that you have a reserve that will help you to proceed with other plans if required. This can make all the difference to your marketing, but only if you approach it wisely. Plan ahead, as it is not good business practice to 'coast' along. Even the most well prepared marketing plan runs the risk of something going wrong and leading to increased costs, often due to something outside your control. Having this leeway will prove invaluable because it provides the opportunity to deal with a situation regarding money without stress. It provides you with the freedom to proceed with other campaigns without it causing you too many problems.
FACT
The average small business owner will dedicate around 16% of their annual budget for 2018/19 to marketing, according to a poll by affilinet.
Source: www.b2bmarketing.net
11.4 How to Get the Most Out Of Your Budget
In marketing, the one thing to
always strive for is getting the best possible return on your investment. This
means you need to get the most exposure to the correct market for the lowest
amount of money, which is not always easy. To get the most out of your budget
you must 'research and plan', at all times. It is not advisable to launch a
marketing idea without proper consideration. Spend time thinking about how to
get from A to B and what each step is going to cost you. As mentioned earlier
in this module you must plan ahead and be prepared to spend time searching for
the best prices. This can make a huge difference as to how much you can get out
of your budget.
The only thing we stress, in terms of looking around for the best deal, is to ensure you still obtain something of real quality, or you run the risk of incurring a costly mistake that will then require additional marketing to rectify. In addition, it is important that the individual that is responsible for marketing is well aware of the budget and what is left of it on a monthly basis. They need to look at the options that are available and then weigh up the methods that will ultimately lead them get the most possible exposure. In order to achieve this, we recommend thinking about the following key points.
Think of your aims.
By thinking about your aims, and be reasonable with this, it can provide insight into the amount of effort or the sheer scale of marketing that will be required, in order to reach those objectives. If you simply want to get some attention it will use up less of your budget and, as a result, you will be able to get more for your money.
Are there any deals?
Shopping around will allow you to
make more of your budget and stretch it that bit further. However, you need to
consider the quality of what you are getting so try and strike a balance. There
is no point in trying to save money if you are only going to be let down by a
third party not delivering on what they promised just because of cost. At the
same time, there is no doubt that you can save some money by looking around.
Are you sure about the direction in which you are going?
Before you spend any money it makes sense to confirm that you know the direction in which you plan on going for the campaign(s). If there is any uncertainty, do not proceed because uncertainty will lead to bad decisions which may result in you spending money unnecessarily. Look at your plan, think of the actions you need to take and then only proceed if you are absolutely sure about it.
Has it worked before?
The chances are that the plan at
which you are looking at is not unique, even though you may have your own spin
on it. The benefit here, however, is it allows you to see if other people were
able to generate the desired results when they tried it their way. If it worked
for them, then it should give you the confidence to try things your way. There
is quite a lot of soul searching and thinking to do before you set a budget to
get the most out of it. Do sufficient research to cover all possible eventualities,
and then do it all again, just to be sure.
Budget and cash flow problems are major contributors to companies vanishing from their industry and, if you are not able to keep a tight control of things from a marketing point of view, then it is all too easy for the budget to be used up very quickly which puts excess pressure on other aspects of the business.
11.5 Key Mistakes that People Make with the Budget.
Finally, we look at one area that
is of the utmost importance: the mistakes that people make with their budget
that eventually lead to them using up their money before they have achieved
their desired results. We accept that anybody can make a mistake that could be
costly, however, we can do things to help reduce the chances of that happening.
So, with that in mind, the main mistakes that people make are as follows:
Lack of planning.
The first major mistake is that people do not plan well and in advance; instead they invest in their marketing ideas without looking at the bigger picture. This is unwise as it can take time for a marketing strategy to have a real impact and, if you do not plan your budget accordingly, it can often lead to you spending your money far too quickly.
Failure to look around for the best deals.
If you have never been very involved in budgeting for marketing purposes, then you are unlikely to be aware of the going rate for various types of marketing or advertising. Also, people tend to be rather lazy and just select the first company that can offer what they are looking for. Instead, it is definitely advisable for you to consider using the Internet in order to find companies that have a solid reputation for producing various types of marketing materials and that can do so at a substantially reduced price.
They always go for the cheap option.
Whilst it may seem good business sense to try and save as much money as possible, that is not always the case. Instead, a cheap option may result in damaging your marketing because it will often end up looking cheap and give the wrong impression of your business. You must remember that the key to marketing is to provide your potential market with the desired message about your business and that must always be something positive from the outset. If you always select the cheaper option, you will end up getting the wrong reputation and, although you may very well get more marketing out of your budget, it will not get you the turnover that you are hoping for so, in that sense, you are not getting value for money.
They think that sales will help them.
A mistake to be avoided is the belief that an anticipated increase in your turnover will bail you out and allow you to spend more on marketing. However, this can cause a shortfall in your budget if it this fails. Only ever work with money that you know you have available and never try to second guess sales.
Their research is out of date.
Marketing ploys and tactics change from time to time as some ideas regain popularity and others fall by the wayside. However, it is all too easy to be involved in a method that is out of date, and this could use up your budget with very little chance of getting any kind of return on the initial investment. Make sure that your research into your market and strategies is current or this could prove to be a costly mistake, leaving you unsure why a certain campaign or tactic not working.
MODULE SUMMARY
In this module, we looked at something extremely important: dealing with the budget. We advised you spend sufficient time thinking about the financial side of things (possibly more time than you originally anticipated). Simply skimming over this subject would be a big mistake and one that could completely undermine your entire marketing strategy; something to be avoided at all costs.
In the next module, we focus on how you assess the success of your marketing plan. This is important to allow you to determine if any changes have to be made, in order to reach your set goals and targets.
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