Many small businesses believe that marketing is not as important as other business activities. While it is crucial to have your business affairs in order, it’s also important to make sure that people are drawn to your business. Marketing is what gets your business leads and lets people know your business exists. But, one big problem is wondering how much to spend on marketing when you have a small business. It’s good to know you won’t be over or underspending. So how do you identify the cost of marketing that your business should be spending? Well, let’s get into some of the things you should be considering when finding out the cost of marketing for your business!
Research the Industry
A typical thing to consider when making business decisions is to see what your competition is doing. Research where they post their ads and how frequently they post them. This can help you gain insight on the industry as well as understanding what has worked and what hasn’t. This can allow you to avoid making the same mistakes and to start off on the right track.
Identify Your Goals
To plan how much you should invest and what you should invest in, you should define your main goals. Do you need a certain amount of sales by the end of the month? Do you want to gain subscriptions? Do you want a specific amount of visits to your website? These are the types of questions you should be answering so you know how to develop a successful marketing strategy.
Understand the Numbers
One way to figure out how much the cost of marketing should be is by spending somewhere between 2.5% and 10% of your overall revenue. So for example, if you earn $100,000, you can invest $10,000. That’s a solid amount to spend to help your business attract attention. I know it seems like a lot to be spending. But you’re not throwing away that money, you’re using it to help your business. It’s just another mandatory part of a successful business. Besides this percentage, it’s good to know your margins and Customer Lifetime Value (CLV). Knowing who are one-time customers or revisiting customers can help determine the specifics for how much specifically the cost for marketing will be.
Know the Cost per Platform
There are a few different costs that you would be spending as part of the marketing costs. So, it’s important to understand these categories and to figure out how much to spend on each one and adjust them later on.
- Your website: This will include the building of your site along with the monthly maintenance and hosting. You should know how much these will be, especially since a website is one of the most important marketing tools for your business. If you’re looking to develop your website or find hosting services, contact us at Siva. We’ll do what we can to help your business’ website thrive.
- Social Media: Social media is great for advertising since most people in society have an account to at least one platform. It requires payment to post ads on these platforms, so that’s something to keep in mind when developing the cost for marketing.
- Online advertising: These can include Google ads. If you’d like your business to be easily searchable online, this is a crucial category. Otherwise, it won’t be easy for people to stumble on your site.
Traditional media: If you feel you can afford a commercial or radio ad, that’s definitely another option as part of your marketing costs. Figure out your target and see the best location to set these ads.
Now we’ve given a few pointers on what to consider when figuring out how much your cost for marketing should be. Now you can go off and calculate what you can afford for your business. Just make sure to do your research, and remember: marketing is a necessary investment, not a risky expense!