Effective Budgeting For Small Business Marketing

 

On average, American businesses spend $14,575 yearly on marketing, which is most likely a tall order for a small business owner like you.

So in this article, let’s talk about how you can create an effective budget for your small business marketing initiatives to stay competitive. Plus, we will explore the best practices to maximize your marketing dollars. 

By the end, you will know how to make every dollar count to gather potential customers and achieve business growth. 

How To Create an Effective Marketing Budget In 4 Ways

Take a moment after you read each step and reflect on how you can tweak it to fit into your current marketing efforts.

1. Assess Your Current Financial Situation

Without knowing where you stand, it is hard to plan your next steps. But when you know where your money comes from and where it goes, you can make better decisions.

Additionally, this will help you allocate funds wisely and make sure your marketing efforts are supported appropriately. 

What To Do

Review your business account. Look at your income, expenses, and cash flow. Then, identify any patterns.

Are there months when you spend more? Do certain expenses repeat?

For example, you notice that your expenses are higher in the summer months because of higher utility bills. You also see a recurring expense every January for annual insurance premiums. 

Use these patterns to understand where your money goes and where you need to adjust your spending. Perhaps you need to lower AC usage during the summer or look for another insurance provider to cut down on expenses. 

Next, list all your current marketing expenses, like:

  • Online ads
  • Email marketing
  • Print advertising
  • Social media marketing
  • Search engine marketing

Listing these marketing-specific expenses gives you a clear picture of how marketing impacts your overall finances.

After that, compare your overall income to your overall expenses. Are you spending more than your earnings?

If the answer is yes, reevaluate your spending. Look for areas where you can cut costs without hurting your business. So reduce non-essential expenses or find more cost-effective alternatives for necessary ones. 

If the answer is no, you are in a good position to optimize your spending. Consider reinvesting some of your surplus into high-impact marketing strategies to fuel further growth. You can also expand efforts that show positive results so you can continue to build on your financial stability.

If numbers are not your forte, consider hiring a virtual accountant. Get them to organize your finances, compile data, and share insights to help you make smarter budget choices. They are also less expensive to hire than in-office accountants, which is good for a small business.

2. Set Clear Marketing Goals

Define what you want to achieve with your marketing campaigns so you have a clear direction on what steps to take. Without clear goals, you will waste money on efforts that do not help your business grow. Plus, these will help you measure your marketing success.

What To Do

Use the SMART framework. It can make your goals structured and actionable to help you focus your efforts and track progress effectively.

Here’s an example: 

Overall goal: Increase traffic to the business website by 20% within 8 months. We will track this increase using Google Analytics and monitoring monthly website visits. To achieve this, we will implement effective SEO strategies and keep our blog updated. This effort aligns with our mission to provide valuable resources to our target market and raise brand awareness.

With a SMART goal in place, you can focus your resources on specific tasks, like hiring an SEO expert, that directly support your objectives.

3. Zero In On Your Target Market

Focus on the people most likely to buy your products or services. When you know your ideal customer, you can direct your marketing efforts where they will have the most impact.

What To Do

For B2C brands, start with a thorough market research. Use Google Analytics to dig deep into audience insights. Simply go to your Reports tab and do the following:

Google Analytics 4 User Demographics & Audiences Report

Use the data to identify patterns and common traits among your customers to create your small business marketing strategy.  For example, let’s say you have 3 branches of your bakery in Washington and find that the one in Seattle is the most popular.

You also see that your main customers there are women aged 25-40 who are most interested in organic and gluten-free products. Direct your marketing efforts to attract more customers like them. 

You can allocate a portion of your marketing budget to sponsor local farmers’ markets or health food festivals in Seattle. Plus, tailor your advertising and promotions to highlight your organic pastries and gluten-free bread.

For B2B marketing, analyze your current customer base to see which industries and company sizes bring the most revenue. Use your financial statements to see this data.

For example, if you sell office supplies and notice that most of your sales come from mid-sized tech companies, focus your marketing efforts on similar businesses.

You can also check out your clients’ social media channels to understand their engagement and interests. This helps you tailor your marketing messages to better resonate with their needs and preferences. 

Back to our example, if you see your tech company clients frequently engaging with posts about productivity tools, highlight how your office supplies can enhance their efficiency and productivity.

With this approach, you can save money and increase your chances of success since your marketing budget reaches the right people who are more likely to become loyal customers.

4. Target The Most Effective Marketing Avenues

When you focus on the right channels, you:

  • Maximize your return on investment.
  • Reach your target audience more effectively.
  • Build brand awareness without wasting money. 

With this, you do not have to spread your budget too thin across many ineffective channels that barely bring in an ROI.

What To Do

Analyze your data. Use Google Analytics to see which channels bring in the most traffic and conversions, like this:

For social media, use Sprout Social to compare which of your social media platforms draw the most audience or engagement. Just head over to “Reports” and click on “Cross-Network.” 

There, you can pick metrics to compare platforms, like audience growth or post performance. 

Here’s one for the former:

For example, let’s say you get the most engagement on Instagram. Focus on creating vibrant, high-resolution images that showcase your products in detail and reels that tell a story.

If your traffic is mostly on YouTube, create informative video content to address your audience’s needs and interests. Produce tutorials, BTS footage, and product demos to keep viewers coming back for more. 

To help with your marketing budget, monetize your YouTube channel and reinvest what you earn into doing more high-quality videos. 

5 Best Practices To Maximize Your Small Business Marketing Budget

Highlight the practices that stand out, then think of how to fit them into your current efforts for better results.

A. Prioritize High-ROI Marketing Activities

Focus on strategies that provide the best ROI. High-ROI marketing activities attract more qualified leads that you can turn into new customers faster. You can also use this to build stronger brand recognition and loyalty among your target audience.

In addition, high-return strategies let you scale up marketing efforts faster. It also lets your team work more efficiently and avoid putting all their energy into less impactful tasks.  

How To Implement

To identify which marketing activities yield the best results, review your previous marketing campaigns to see which channels brought in the most leads and sales. Use Voluum since it offers analytics across multiple channels to see which brings home the biggest ROI. 

Here’s how it works:

How to track & optimize your Facebook ad campaigns with Voluum?

Focus on digital marketing because it provides higher ROI. In fact, content marketing can bring in 3x more leads while costing 62% less than traditional methods. You can also invest in email campaigns and social media strategies to strengthen your online marketing. 

For example, let’s say you are in the B2B SaaS niche. You notice that your content marketing efforts, like your industry-specific blog posts, attract a lot of traffic and leads. Zone in on this and create more quality content instead of doing print ads.

Then, promote it through social media. As a B2B business, focus on targeted LinkedIn ads since this is where the decision-makers are active.

Speaking of ads, only allocate a budget for paid ads on platforms your target audience uses the most. If not, this can rack up your bill, especially since most run a pay-per-click (PPC) system. So you will be charged every time someone clicks your ad even if it does not convert.

B. Engage In Co-Marketing Opportunities

Partner with another business to promote each other’s products or services to maximize your marketing channels. Use this to tap into a new audience without significantly increasing your budget. 

Plus, sharing resources can help you and your partner improve each of your brand’s value propositions. 

How To Implement

Identify potential business collaborators who share a similar target audience but are not direct competitors. So research local companies, join local business associations, attend networking events, and explore community directories to find brands that complement your offers.

You can also check their social media. Look at small businesses your customers follow and engage with on social media platforms. This can give you an idea of potential partners who appeal to the same audience.

Additionally, participate in industry-specific blogs, forums, and online communities. Then, create a shortlist of possible collaborators. 

Next, assess their business values and reputation. Make sure they share what you believe in and have a positive company image. 

Lastly, the process requires intensive research, so get a local project-based intern. You can let them build the data foundation so you can make better decisions. While they do this, perhaps you can focus on other best practices.

As for what project collaborations you can do? Here are ideas you can suggest to your partner:

Joint Email Marketing Campaigns: For example, if you run a small bakery, team up with a local coffee shop to offer a combined discount. Create an email campaign for a special offer, like “Buy a Coffee, Get a Free Pastry.” You can also highlight each other’s best sellers in the email to make the deal even more tempting. 

To do the campaigns, use a CRM like HubSpot to collect, organize, and manage your shared customer data or leads for this campaign. They can automate your email campaigns, like this:

How to create automated emails to use in workflows in HubSpot

First, choose your type of influencer:

Co-Branded Content: Back to our example, you can create BTS videos of how you create your pastries and their journey from selecting the best beans to crafting the perfect cup of coffee. Promote it on each other’s social media, newsletters, and websites.

C. Team Up With Influencers For Greater Reach

This leverages conformity’s role in marketing. When your audience sees influencers they trust endorse your product, they are more likely to trust these opinions and try the product themselves. So use this to tap into the customer journey at an emotional level. 

Plus, these influencers can bring their loyal, engaged followers directly to your brand. This increases your business’s visibility and sales without traditional advertising’s high cost.

How To Implement

First, choose your type of influencer:

Since you are a small business with a limited budget, go with nano and micro-influencers. Despite having fewer followers, they get more engagement. They use their smaller following to create a more personal and closer relationship with them. 

This makes their followers more likely to trust them and buy your products or services. Plus, they are easier on the budget, so you can boost your sales and get noticed without spending a fortune on pricier options like newspaper ads, macro-influencers, or posters.

To find your influencers, use Upfluence to vet social media creators based on their content, performance, and audience reach. It will also show you their engagement rates and follower demographics. Simply use the filters like geolocation, language, keywords, and gender.

For example, let’s say you run a local cafe. You can input these keywords in the tool:

  • Coffee
  • Cafe
  • Foodie
  • Local Eats

To be more specific, set the language filter to English and the geolocation to your specific city or state. You can even choose if you only want a female or male influencer.

Additionally, you can use Upfluence’s built-in messaging platform to reach out to influencers directly without having to leave the tool. With this, you do not have to switch back and forth between different social media accounts to send messages.

D. Engage With Your Community

While enterprise-level marketing often focuses on broader, global strategies, your small business can do more personal marketing activities. Strong ties with your local community let you build loyal customer relationships that can last a lifetime. 

When you connect with your local audience, you create a sense of trust and community. What does this all result in? 

Repeat business and word-of-mouth referrals, which can save you a lot of marketing dollars. You will not have to be as aggressive with costly customer acquisition campaigns. 

How To Implement

Participate in local events like charity runs and community fairs. Put your business name in front of locals to show you care about the same things they do. You can also organize your own events.

For instance, if you run a brick-and-mortar location like a cafe, host a quarterly “Community Coffee Hour” where customers can come in, enjoy a discounted cup of coffee, and discuss local issues or events.

Additionally, you can engage with them through social media. Create content that highlights your involvement in the community, like photos from local events or stories about how your business supports local causes. 

You can also encourage your customers to share their experiences with your business on social media and respond to their posts to build a two-way conversation.

E. Improve Your Local Search Engine Optimization

Optimize your online presence to appear in local search engine results. With this, you can drive traffic to your business without surging costs. This also helps you draw in a constant flow of people, increasing both foot traffic to your store and visits to your website.

You can leverage this to reduce the need for expensive ad campaigns to make your marketing budget more effective in the long run.

How To Implement

First, add and claim your Google My Business profile. Fill out all the information accurately, including your business name, address, phone number, and website.

How to add or claim your Business Profile on Google

After you do this, encourage your customers to leave a review. With this, you get a better chance of being included in Google Search’s Local Pack, like this:

The local pack shows up at the top of Google’s search results when users look for local services or businesses. It showcases a map with pins and a list of 3 businesses related to the search query.

You should also use Google AdWords (aka Keyword Planner) to find relevant local keywords. Suppose you have a local bakery in San Francisco. Input these keywords into the tool: bakery San Francisco, baked goods.

Here are the results:

With these results, you can plan your content strategy around high-performing keywords. For instance, “gluten-free bakery” gets 10k to 100k monthly searches. 

So, create engaging content about your gluten-free offerings to rank for that keyword in search engines. Make sure to include the keyword in your blog posts, product descriptions, and company profiles to help those searching find you more easily. Mention where your business is in your content, like “gluten-free bakery in San Francisco.”

Conclusion

Now, you are ready to take your small business marketing strategies to the next level. Get your team together to assess your current financial data and marketing efforts. Then, decide which marketing channel can turn your leads into paying customers. 

But remember, effective budgeting is not just about saving money. It is about making smart investments to grow your small business. 

So stay in the loop with Small Business Sense. Whether you are looking for tutorials or the latest tools, we have you covered. Keep learning and stay ahead with our blog.

Staff Account