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How to Structure a Marketing Budget

Whether you’re spending £100 or £1m, I firmly believe that having some structure to where you put each penny will help you to:

• Make sensible decisions about where to spend your money

• Track whether your spend is worth it in the long term

• Avoid nasty surprises in the form of unexpected costs

• Ensure you don’t run out of cash half way through the year

I look at marketing spend from three angles when working out a budget. The first is in allocating an appropriate spend to each step of the buying decision to make sure you have a watertight set-up. The second is in working out your minimum baseline, and thirdly making sure you have flex options.

Budgeting Across the Buying Decision

Having a step by step process for mapping marketing techniques against each step of a buying decision, is a powerful planning approach which gives you a stepping stone that takes someone from initial awareness, right through to profitable loyalty. By looking at what task each marketing technique fulfils, and the level of influence it has at each step of the process, you end up with a template for apportioning your marketing money across the whole buying decision.

This is the first step to structuring an effective marketing budget for your small business.

Establishing Your Baseline

If you market yourself in peaks and troughs, your business will have the same stop-start rhythm to it. Not only is this approach exhausting, it’s wasteful and ineffective. You’re much better off to establish a baseline set of marketing activities that you undertake consistently.

Things that will happen come what may.

I’d go so far as to say that I’d rather most businesses spent less on marketing, if they only did so consistently. Marketing is like exercise, it pays off most if you take a little and often approach (rather than binge and purge). So, there are three things to consider when establishing your marketing budget baseline:

1. How much can you afford to spend every month for a year? Whilst larger businesses might have the luxury of a more strategic approach to budgeting, in a small business setting, working out what you know you can commit to spend every month is a good starting point.

2. What’s the ‘silver’ level spend for each step?

Having undertaken the budget shaping exercise, I typically look at each step in the buying process and work out a Bronze / Silver / Gold pricing level for each one. By which I mean, what’s the minimum, ideal, and luxury version of each technique. Once you’ve worked this out for the techniques that make up your watertight marketing operation, we suggest you go for Silver if you can, which gives you a baseline for your marketing activity.

3. Make allowances for maintenance

Most nasty surprises can be avoided with a little bit of forethought. When it comes to marketing budgets, the key area that people forget is in maintaining things like their brand, website, event material, printed stock, etc. Of these, I’d say brand and websites are the biggest culprits. Foundation pieces in a marketing toolkit (brand, website, database, collateral, etc.) should be treated a bit like an employee (with a salary, training budgets) – you’ll need to nurture and maintain them to keep them well-oiled.

Pre-Planning Some Flexibility

There’s nothing more predictable than the fact that there will be things you can’t anticipate. So, plan for it. There are two key ways of doing this:

1. Have a contingency budget

Put aside an affordable amount for unplanned expenses or opportunities. Most small businesses will find money for an emergency if they really need to. And, if not, you can always put the money towards a really innovative Christmas campaign at the end of the year.

2. What’s the step up or step down?

You’ve already done the hard part on this by working out Gold / Silver / Bronze options. This means that if you’re above or below target in terms of income, you can change tack to the lower or higher level alternative. With my clients, I call this the A, B, C activity plan. Each quarter, I review my cash position to decide which plan to go with for the quarter ahead. This maintains marketing momentum, whilst flexing the budget.

So, there it is… my recommended three steps to structuring an effective small business marketing budget. I hope you find it useful.


Word by Bryony Thomas, Author of Watertight Marketing


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