Oh, how you love to talk about planning—your business plan, financial plan, vacation plan and what I think is most often discussed—your marketing plan. Congratulations to you if you’ve drawn up an official marketing plan for your venture. But if you intend to transfer your plan from the page to reality, you must assign it a budget. Somehow, that practical reality is sometimes glossed over. Ask a Freelancer or business owner what the company’s annual marketing budget is and you’re likely to be met with a blank stare or incoherent stammering. That is not the ideal response, my friend! So today, let’s learn how to estimate a reasonable budget for a B2B annual marketing plan.
Laurel Mintz, founder and CEO of Elevate My Brand, a Los Angeles digital marketing agency, has developed what she calls “marketing math,” to help her clients determine what would be a realistic B2B marketing budget range for their organizations. According to Ms. Mintz:
New companies in business for one to five years would be wise to allot 12 – 20 % of gross or projected revenues on marketing activities.
Established companies in business for more than five years are advised to commit 6 – 12 % of gross or projected revenues to marketing activities.
Those figures seemed rather hefty, at least they did to me and maybe you agree. According to Laurel Mintz, if a new business generates just $35,000 in after-tax bottom line revenues, she nevertheless feels that the owner should devote $4,200 – $7,000 annually to a marketing budget. Ouch! I mean, how does one pay the living expenses and taxes and health insurance when in the salad days of a start-up?
Think of it like this—no one said that self-employment, whether Freelance solopreneur or entrepreneur, was going to be either easy or inexpensive. Just like you set aside money for other vital expenses, marketing deserves a budget, too, because without marketing you could wind up presiding over a stunted venture that never gains traction and never fulfills its potential.
Marketing activities, whether innovative or predictable, give the venture a needed push into target markets. Marketing promotes the expansion of prospective clients who will flow into the sales funnel, distinguishes the organization from competitors, establishes and promotes the brand, justifies the pricing structure and keeps the enterprise at top of mind and positioned to beckon clients and referrers.
Now for the cold water—there are no guarantees in marketing and the ROI is notoriously tricky to quantify. But realize that marketing is all about testing and that means (calculated) risk. If you approve a certain sum of money to devote to the year’s marketing activities, you might achieve all of your marketing campaign goals, or do twice as well, or only half as well as you projected
Risk is real in marketing, but it’s mitigated by your awareness of how your clients have been known to respond to the marketing tactics that you can afford. Research shows that if you conduct marketing activities that resonate with your target clients and are within budget, then over time, the marketing campaigns will enhance the bottom line and your brand. Treat marketing activities as an investment that will surely pay off and allocate funds each year.
Marketing campaigns are all about planning, budget and execution. If meager finances make you feel that the budget formula given here is too risky for your venture, then focus on planning and execution and roll out “sweat equity” campaigns that utilize tactics that cost time instead of dollars, such as content marketing, face to face networking and social media. Just do it.
Thanks for reading,
Director and actress Ida Lupino on the set of The Hitch-Hiker (1953) Photograph courtesy of RKO Pictures/ Photofest