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You’ve heard the statistic before. As many as 80% of small businesses close their doors within the first five years, according to the U.S. Small Business Association (SBA).
The causes aren’t a secret.
Many fail because they lack effective marketing strategies. Others don’t believe in marketing. Some try their hand at marketing themselves. Still others spend too much on acquiring new customers and not enough on nurturing existing customers. Many break their budget — if they have one — because they don’t have a marketing plan. Some are clueless about hot to optimize their budget to increase profit margins. Others continue to do the same things even if they don’t work. Still others don’t know how to measure their marketing results, or real Return on Investment (ROI).
That leads us to two points.
First, marketing is critical to business success. You must have a marketing plan. If you don’t know your desired destination, how are you going to get there? There will be road blocks, turns and changes to which you will have to adapt. Just like a business plan, a marketing plan is not meant to be a final destination but is intended to serve as a roadmap and should be revisited annually, as well as updated as needed. It will evolve and change over time.
Secondly, a plan is only as good as if properly implemented and execution requires money. Therefore, you must have a marketing budget. The SBA recommends spending 7 to 8 percent of your gross revenue on marketing for businesses with $5 million a year in sales and a net profit margin — after all expenses — falls between 10 to 12 percent. Never base your marketing budget on what’s left over after covering all other expenses.
Developing a Marketing Plan
A marketing plan outlines your marketing strategies, tactics, costs and projected results over a period of time. When used properly, your marketing plan becomes a critical resource for the entire company.
So, where do you begin? Marketing plans vary based on business needs. They can be can simple, or complicated, but every plan should at least include the following:
- Market research – This may include primary, secondary, formal and informal research
- An assessment of the competitive landscape and specific industry, including best practices
- An evaluation of your business, including its strengths, weaknesses, opportunities and threats (SWOT analysis)
- Your competitive advantage, or unique value proposition
- Identification of your target audiences and their buyer personas
- Your mission, vision and brand attributes; your key positioning messages
- Clearly defined short- and long-term business goals with key performance and success metrics in place for continued measurement, evaluation and adjustments as needed
- Specific strategies (what and why) to achieve the goals, with measurable objectives for evaluating progress
- Specific tactics (how) and a step-by-step plan of attack (who is responsible for what) to achieve the goals with timetables and deadlines
- Identification of one person to oversee and manage the plan
- Successful execution of the plan on time and on budget
- Measure results
- Progress reports to the entire organization
Adapt strategies as needed
Establishing a Marketing Budget
Your marketing budget — and plan — keeps your entire team focused on achieving specific goals within reasonable economical business restraints that will ideally generate new customer leads and strengthen existing customer sales.
Here are six tips to create a marketing budget.
- Know your sales funnel – You must understand your sales and revenue cycle from prospect to customer.
- Know your operational costs to deliver the marketing work — Do you have internal resources and bandwidth? Does outsourcing make sense? What is the cost of potential inaction?
- Set your marketing budget based on business goals – Budgets must be allocated across channels so be sure to consider everything from brand development, websites, blogs, sales collateral materials and promotions to social media, campaigns, advertising, events, etc.
- Position marketing as an investment not a cost — It will pay off if choices are made strategically, tactics are implemented correctly, and results are measured and reported.
- Consider your growth stage —As a general rule of thumb, business shouldspend 5 percent of their total revenue on marketing to maintain their current position in their industry. For companies looking to grow, or gain greater market share best practices suggest budgeting a higher percentage, usually at least 10 percent of annual revenue.
- Understand current and future trends – Adopt and apply different technologies to your marketing mix to keep up with industry changes, but realize all trends are not for all businesses. Always, keep in mind your target audiences and your specific business goals.
Building a successful company always involves successfully marketing your product, your service, or yourself. At WebRealSimple, we believe in keeping marketing streamlined and simple.
Contact us for a free consultation today to discover how we can optimize your marketing efforts and help your business succeed.
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