Preparing the Marketing Budget
Initial budgets are difficult to prepare without a previous record or guide, but it is imperative that adequate money be set aside for marketing. There are several methods of determining budget dollars: “percentage of sales,” “objective and task,” and “per unit.” Each is appropriate for certain types of business. All are defined in the Glossary section. Choose the one that best suits your company’s needs.
The easiest budget method and the one most commonly used by small business is “percentage of sales.”
Calculate projected sales and set aside a percentage of the told figure for marketing expenses, keeping in mind that 3 percent of sales is an average figure for advertising and promotional costs alone. Higher percentage allowances generally produce greater results if dollars are wisely used. The marketing fund must also cover general administrative expenses, travel, supplies, postage, resource development training, sales force expenses, marketing research, subscriptions, and professional memberships. Although the budget must be flexible enough to allow for miscellaneous expenditures, it is necessary to live as closely as possible within the confines of the predetermined allowance.
The market budget may be prepared monthly or quarterly, depending upon the individual business. Begin by planning a monthly budget. After a year of operation, you may determine that a quarterly breakdown is adequate.
The marketing budget is only effective when implemented around annual business and development objectives, and may be increased or decreased each year depending upon sales and changing needs. Developing subsequent marketing plans is a far simpler process with a previous plan available as a measuring stick. Good marketing requires research, commitment, and the ability to be flexible as the market changes. The written plan must be a constant business tool, not constructed then shelved until the next year. Use marketing to make things happen for your business.