No matter what goods or services your small business specializes in, you will need a marketing plan and budget to attract the customers you need to build and grow your business. A strong marketing plan will help you get the word out about your business and is crucial to your success. Whether you decide to advertise your business on the radio, in the newspaper or other print, on television, billboards or social media, including a budget line for marketing in your business plan and loan is a step you cannot afford to leave undone. As you plan your marketing and promotional budget and apply for your small sines loan, it is important you include everything you need to get started and get the word out.
Business cards, website design, brochures, signage for your store and promotional items such as pens imprinted with your logo are smart, tangible ways to promote yourself and can help attract business and get your name out. As you are structuring your business plan, be sure you consider the cost of these promotional items and budget accordingly.
There are several ways to structure your promotional budget. If sufficient funding isn’t available, you can also acquire a business equipment loan to get the necessary equipment that might be needed for your business.
Here is an overview of some of the most popular methods:
1. Percentage of sales. In this method, you allocate a percentage of your projected/anticipated annual sales to promotion and marketing. New businesses may decide to spend up to fifty percent of their projected sales on marketing in the first year to build momentum and generate a customer base and decrease that amount to the standard of nine to twelve percent of sales as they grow and establish their customer base.
2. The Set Dollar Amount Approach. In this method, you simply decide what dollar amount you need to allocate to your marketing and promotional budget and set a flat amount. For new businesses this can be challenging because you do not have a track record of sales and marketing expenses to go by. When choosing this approach many first time business owners use industry standards or seek mentoring from others established in their field to help them estimate the costs of marketing and promotion for the first year.
3. Matching competitors. In this method, business owners seek out the advertising their competitors are doing and estimate the costs associated with that marketing and copy it.
4. Marketing plan objectives. This is often considered the most effective method and works by analyzing the objectives of the marketing plan and structuring your budget around meeting those objectives. While this is often the most realistic way to determine how much you need to spend on promotional materials, it is often hard for new businesses to realistically meet these advertising projections because of limited budgets. Even with that limitation, however, this method is widely considered the most effective in planning promotional budgets.
Every business is unique, but every business needs promotion. Do not fall into the trap of believing that all is takes is opening your doors and customers follow. Choose the method that best fits your business and plan your budget and loan request accordingly. By including all your anticipated promotional costs in the small business loan you apply for, you will not be met with unanticipated costs and will be able to get the word out to attract the customers you need to succeed.