Large companies have the capacity to reinvest millions of revenue back to marketing for the following year. However, for small business owners, creating a strategic budget for marketing, let alone sales, could be challenging.

Understanding Small Business Opportunities

There has been a big craze for digital marketing, content marketing and other niche marketing that have emerged over the past years. The biggest challenge for small business owners is catching up in every new trend in the current market.

However, this doesn't mean you have to dismiss digital marketing options. At this point, even though you're a brick and mortar local shop, having your business up there in the World Wide Web helps... a lot.

To understand how you should create a budget for digital marketing this year, it is important to understand the importance of getting an online version of your business.

Now that almost everyone you know, most especially majority of your clients, are online, your business should be, too. It's not for the simple reason that you should create a website for your business. It's a way to connect with your potential clients as well as your old ones.

Creating a digital representation of your business online is the same as polishing the design of your local shop or printing out flyers for your new event. The only difference is that it has a bigger reach. When you send in an ad in the local newspaper, it can only reach so far; when you do that online, you can reach people who are even outside of your country.

That's the power of the Web: connecting you to thousands of people outside your reach. And that's the point of marketing.

What marketing does is it introduces your businesses as well as new updates to people who can potentially be customers soon. If we're going back to the local shop analogy, there should be a lot of things that go on creating an effective digital marketing campaign.


  • Your tables and chairs = lead magnets, Facebook ads, etc.
  • Your interior design = web design and GOOD site hosting
  • Your flyers, free tasting, etc. = marketing freebies like eBooks, emails and more!

It's an investment that should be equivalent to your physical store. If you are using that location to serve clients, attract customers and store your products, that purpose of digital marketing is more of the same: getting you a healthier bottom line.

Cheap vs Pricey: Choosing Effectiveness Instead

Choose-effective-services-and-don-t-just-go-to-the-first-cheap-offer--PLXSS-
Choose effective services and don't just go to the first cheap offer (Image via ThinkStock)

Small businesses have invested probably far too much than what they have gotten in return simply because of choosing the wrong investments when it comes to marketing. According to Forbes, to find out where you would be allocating your budget, you need to understand your target audience first. If you are locating older consumers, it is not smart to go and bring in the big bucks for a Snapchat ad.

At the same time, know that not every blog is an effective content. Another way small businesses invested in "marketing" over the past two years was to either hire an inexperienced writer or purchase "SEO-fied" blog posts that was supposed to make your ranking higher in Google.

At the end of the day, top Google ranking did not happen, no traffic was converted and the blog posts became stale.

Content creation is a big part of an effective marketing campaign, but if you don't choose QUALITY you will still lose.

The next thing that you have to account for when looking for cheap vs pricey services is the brand offering it. Though there are many avenues for cheap but ineffective content, it doesn't mean every low-cost offering out there is not worth it.

To understand where you can compromise, know what the big goal really is, Forbes noted.

Do you need more leads, more sales, more brand awareness? Your goals will help determine where your money should go. For example, if you need to generate leads this month and you start off with an SEO campaign, you’re probably headed down the wrong path. If you want to create long-term brand awareness and you start off with an aggressive Google Ad Words campaign without setting it up right, you might fail.

Once you've got your eyes set on the prize, you can then determine which agencies or outsourcing avenues you can afford more and which parts of digital marketing can you temporarily put on the background.

Crunching The Numbers

Small-Business-BudgetingWhen it comes to small businesses, marketing budget is still necessary. (Image via ThinkStock)

Finally, we're at the stage of determining how much does it really cost to run a marketing campaign for small businesses. Though we have to admit, there's no definite or exact value, there's a way you can calculate it on your own.

1. Identify the Result You Want

As mentioned above, you have to understand what you want to accomplish with your marketing strategy. If you're a local restaurant, do you want more delivery orders coming in from your Facebook page? If each order will be an average of $100 and you want to get 10 of those each night, how much advertising budget can you allot to get a net profit? Will daily Facebook ads of about $100 be enough to cover a potential average order of $1000?

2. Minimize the Risk

Risk-taking is the foundation of marketing. When you create a content or do a blog or even promote on social media, there is no guarantee someone will buy. To avoid pitfalls, think of other resources that will empower your marketing campaigns.

Do you have a software that will automate online ordering? Do you have a small business agency that can help you manage and monitor your social media ads (so you know it targets the right audiences and it's not going out there for nobody to see).

Having someone with deep understanding of the marketing world craft a strong strategy for you also helps.

Lastly, don't forget to incorporate data tracking so you know how your marketing campaigns are performing and how it gives you ROI.

Though these process of minimizing risk (getting softwares, consulting, etc.) seem like they don't give you any byproduct, they are the foundation for the investment you will put in the campaign.

It's the same as when you're buying your new house. You want to inspect it as much as possible and make sure that you are getting the best offer. You can't control how your neighbor will act if you forgot to put out the trash, but you can make sure that this is a house worth buying.

3. What Are You Currently Paying & What's The Speed You're Looking?

You've now put in the foundation and "insurance" for your marketing campaigns by minimizing the risk. Now, it's time to determine the budget.

When it comes to marketing and advertising, there are two ways you can approach it: aggressive and paced.

You've calculated that the cost of acquiring new recurring customers that order about $500 worth of food per week is about $200 per month. You want to get more customers and entice current paying customers to go back to your restaurant more often.

You've learned that you have $10,000 sitting on the bank. You're currently paying client acquisition cost of 10% per customer. Now, you want to increase their monthly spend from $2,000 to $3,500. If we use the paced approach, you can simply increase your budget from $200 to $350 (10% of your per client revenue). Or, you can be more aggressive and scale the marketing budget to $500 per customer.

You can see a gradual and steady increase during the first month, but by the second month, the campaigns have become more popular in your locale that it has brought you double of your expected monthly revenue.

Creating a marketing budget for your small business is directly related to the outcome you want to produce. This varies for every business, but knowing the end goal, minimizing the risk, and knowing the approach for your marketing can give you a more concise idea on how much you can and would like to spend in your marketing campaigns.


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