Marketing on a budget: Smart strategies for small to medium businesses
As a business owner, allocating resources effectively is crucial for growth and success. One area that often gets overlooked or underfunded is marketing. However, even modest marketing efforts can yield significant returns with the right strategies and a well-planned budget.
Setting a realistic marketing budget
A common rule of thumb is to allocate 2-5% of your projected gross revenue to marketing. However, this percentage can vary depending on your industry, business stage, and goals. For example, a new business might need to allocate a higher percentage (up to 20%) to build brand awareness, while an established company may only need to spend 5-10% on maintaining its market presence.
Here’s a breakdown of typical marketing budget percentages based on the business stage:
Please note that these are just guidelines. Your actual marketing budget should be tailored to your specific needs and objectives. But rather than be generic with this article and therefore unhelpful, I thought I’d give an example based on the average.
In 2018 (which I know was a while ago now, but is the only thing I could find), Xero surveyed businesses with 2-5 employees and found that their average annual revenue was around $525,000. So here goes…
Where to allocate your marketing budget
Once you’ve determined your overall marketing budget, it’s time to decide where to allocate those funds. Based on the above example of the annual revenue of $525,000 and an established business, we’ll use 10% of revenue for marketing, which is $53,000 rounded up; here are some common areas to consider:
Website and Online Presence (20-30% of budget - $13,000)
Content Marketing (15-25% of budget - $11,000)
Advertising and Promotions (25-40% of budget - $17,000)
Events and Networking (10-20% of budget - $8,000)
Recommended by LinkedIn
Market Research and Analysis (5-10% of budget - $4,000)
Remember, these numbers are just guidelines, and you may need to adjust them based on your specific goals, target audience, and market conditions.
When and where to invest in marketing
Timing is everything when it comes to marketing. Here are some key considerations:
One crucial aspect of developing an effective online marketing strategy is identifying the platforms where your target audience is most active and engaged. Different demographics tend to gravitate towards different online channels. For instance, if your products or services cater to a younger demographic, platforms like Instagram, TikTok, and Snapchat may be more fruitful than traditional channels like Facebook or X (previously Twitter). Conversely, LinkedIn could be a valuable platform for sharing thought leadership content and making industry connections if you’re targeting working professionals or business leaders.
To pinpoint the ideal platforms, develop buyer personas that outline your ideal customers’ characteristics, interests, and online habits. You could also explore which platforms your competitors thrive on and analyse their tactics. The key is to meet your audience where they’re already actively engaging.
Where to start
While allocating an appropriate budget and deciding where to invest marketing dollars is crucial, it’s important to recognise that a good marketing strategy can only truly succeed if the fundamental building blocks of the business are firmly in place.
Before embarking on marketing initiatives, businesses must step back and ensure they have clearly defined their mission, vision, and core values – or at the very least, check in with them and ensure they are still true.
A marketing strategy that is not firmly aligned with the business’s mission and values risks being inauthentic and disconnected from the company’s identity. Customers can easily detect inconsistencies between marketing messages and a company’s actions.
HubSpot offers free budget planner templates in Microsoft Excel or Google Sheets, for which you must provide your contact details. Beware that these templates contain everything—which means there’ll be some irrelevant information—and they recommend their own products.
Content Marketing
Of course, I can write an article about marketing without discussing what we do here. We’re #2a in the list above, and I swear it’s the best form of marketing – because it’s a short-term and long-term game.
In the short term, sending newsletters to your existing clientele keeps you in touch with them—you go to them. Obviously, the newsletters must provide value and not just be meaningless messages. Still, they do offer the opportunity to educate, cross-sell, and remind your customers to tell their friends about you. The regular content keeps your website updated (which Google loves) and provides content for your social media channels.
In the long term, you are answering questions that your potential customers would type into Google—they’re trying to find information that will solve their problems. If you’ve put valuable information online that helps them, you’ll start filling in the keyword triggers so they find you.
Ultimately, strategic, focused, and consistent marketing is the key to effective budget marketing. Regularly evaluate your marketing efforts, adjust your tactics as needed, and remember that even small investments can yield significant returns when executed thoughtfully.
If you have any questions, email me at lisa@masterjack.co.nz, especially if they relate to content marketing!