On Paper. On Purpose. 5 Steps to Designing your 2010 Marketing Budget.
My wife and I are taking a class called “Financial Peace University” which is Dave Ramsey’s 12-week course that teaches families to shed debt and save money. Last week was the “budget” lesson. Although Dave’s suggestions are geared specifically for home life, I saw immediate applications for designing a more efficient marketing budget.
“On paper. On purpose.” That’s how the popular radio talk show host recommends creating a budget. Every dollar gets a name. Money is set aside for specific purposes and should be used for that purpose only. Surprisingly, most American families don’t have a budget. Even more surprising, many businesses that I talk to don’t have a marketing budget. If this sounds familiar, here are five steps to get you started in the right direction.
1. Set Goals. What are your business goals for 2010? Rank them in order of importance.
2. Commit To An Amount. What is your company willing to invest to hit those goals? A conservative budget is approximately 2-4% of gross sales. Using this example, a $10 million company will invest $200-400,000 to support their current level of sales. More aggressive, consumer-focused companies often spend 10% or more annually on marketing. If you’re aggressive and looking to grow, consider these formulas from Fast Comapany. Scale these figures to best fit your goals.
3. Categorize Your Needs. Make a list of your current marketing initiatives and any new initiatives you wish to implement in 2010. Will this plan support all of your goals? Do you foresee any holes or wasted dollars?
4. On Paper. On Purpose. Now that you have established your goals, total budget, and marketing initiatives, it’s time to start building your marketing plan. Allocate the appropriate funds to each category. Some items may be paid for in lump sums, and others will be paid for monthly. Design this into your budget.
5. Opportunity Fund. Finally, be sure to allocate a category in your budget for un-planned marketing opportunities. These funds could be used for a new interactive or social media opportunity, or maybe even an emergency reprint of your company brochure. Either way, you can usually expect new opportunities to present themselves in the coming year. Even Dave Ramsey recommends having a “blow money” category in your personal budget – it’s kind of the same concept.
So in review: set goals, commit to an amount, categorize your needs, get it on paper, on purpose, and be sure to reserve a few bucks for opportunities that present themselves. Happy budgeting!