The 7 Most Important Questions to Define Your Marketing Budget

Budgets. They can be the best or the worst part of your day – depending on how you feel about maths.

The trouble is, you can’t run a business without them.

We’ve seen a few SMEs manage their marketing with no budget in mind, which often leads to overspend. We’ve also been asked plenty of times – how much should I spend? But the answer is not one single figure. It depends on so many factors.

Based on years of experience building strategic marketing plans and their subsequent budgets, here are seven key questions we use to tailor a marketing strategy and its budget to a business.

1. What are your Business Goals?

The first step to a practical marketing budget is to define your business goals. Some goals are more expensive than others, which is why they have a direct impact on your budget.

For example, building brand awareness with a new audience is often more expensive than building loyalty and repeat custom with an existing one.

So, before you dive in with budget details – ask yourself the bigger question. What do you most want to achieve in your business?

We share more advice on this topic in our blog, The Difference Between Marketing Goals and Objectives.

2. In what timeframe do you need to achieve these?

Perhaps the answer is in 3 months’ time, maybe by the end of the financial year or even within the next calendar year. How fast you plan to achieve your goals will help determine how much budget they require.

An aggressive timeline typically means a more aggressive approach to your marketing. In other words, you might need to spend more to see results sooner.

Of course, most business owners would like results sooner. So, with this question, remember to be realistic. It’s less about a dream timeline for success and more about the real date that a goal should be completed by.

3. Who is your target market?

The old adage rings true – if you’re marketing to everyone, then you’re marketing to no-one. Defining your target audience is a key element to successful marketing.

Once you understand where to reach your audience, you can understand the cost of marketing there. Factors like location (Sydney vs. regional NSW) and the channels they are active on (radio advertising vs. social media) change the cost to reach them.

It can be tempting to find a more affordable channel or location, but in many cases, it is money wasted. A strategic spend on the right people at the right time is worth every penny.

Not sure how to define your audience? Dig deeper with our blog on buyer personas.

4. How competitive is the market you operate in?

There is competition in every industry with more than one business seeking the same audience. But, some industries have major players that increase the cost of marketing there.

For example, in technology there are large names like Apple and Google. In the grocery industry, a local fruit shop can struggle against brands like Coles and Costco.

A small business doesn’t have to compete directly with a big corporate company. But, the cost of marketing in that industry is higher overall. So, your budget needs to be generous enough to cover those costs.

5. Do you have existing marketing infrastructure? What else needs to be set up?

A marketing budget needs to cover more than what you think – which means marketing tools and systems should be on the list too. For example, your CRM system, design software, and survey tools.

If you already have some setup, note down how much they cost each month or annually. If you need to set up new ones, do your research first. There are lots of different marketing platforms out there and they usually list their pricing upfront.

Wondering what should be on the list? Chat to us, or stay tuned for an upcoming blog on typical marketing expenses.

6. Do you have any internal resources?

It’s common for a small business owner to wear all the hats – from CEO to CMO and more. It might be a cost-effective choice, but it’s not always the best strategy for success.

If you plan to make marketing a real function of your business, your budget should be ready to cover all the resources that takes. That includes the salary for an in-house employee, or the cost of outsourcing.

If you already have internal resources to rely on, like a marketing manager, then you may need to add their cost to your budget. Doing so can help you allocate the right amount for the rest of your marketing efforts.

7. Will you take a ‘bottom up’ or ‘top down’ approach?

Marketing is important, but it can be overlooked at times by those in charge. When deciding on your final figures, it helps to decide whether you’ll take a bottom up or top down approach.

Bottom up means that you have a maximum spend in mind. Your job is to decide how this budget can be best utilised. This is a fairly common option for smaller businesses.

Top down means that you will decide the ideal marketing approach to achieve your goals and your budget will be built around this. This is a good option for flexibility – you can increase or decrease the budget as required for each goal.

Ask the right questions with Ebony & Salt

These questions are a great starting point, but they’re not the same as a session with a qualified marketing professional. Working with a marketing professional means getting into all the details of your business and tailoring a marketing strategy and budget to suit.

Ebony & Salt is a boutique agency that aims to simplify marketing for SMEs. We plan and execute marketing strategies from start to finish – including budgets, implementation and tracking results. Sound good? Contact us for an introductory chat.