Tag Archives: marketing budget

marketing budget

Show Me The Money: How Much Is The Marketing Budget?

One of the most common questions I get from people starting a new venture is how much should they plan to spend on marketing; and one of the biggest mistakes I see with new businesses is a tremendous amount of time and money invested in opening the doors making the new office, restaurant or retail space look great, but leaving little to no money in the budget to promote the new venture.

The reality is that whether you are a newly launched company or you’ve been around for years, you cannot expect to attract new customers without marketing.

The marketing budget

So how much should you spend? The general rule of thumb is plan on budgeting one to 10 percent of gross revenues. For newer businesses, that number should be on the higher end of the spectrum or even beyond (possibly as much as 15 percent). Then, once you’ve set a budget, you must determine how it should be allocated.

A few things to consider that will help determine what percentage you may need to budget:

  • How well known is your company name, service or product?
  • What are your competitors spending and where?
  • Who are you trying to reach and what is the best way to reach them?

If you are a fairly unknown entity or your competitors are marketing aggressively, you may need to spend more.

The target market

Next, determining the best marketing mix for promoting your company or product requires a clear understanding of your target market in order to select the most cost effective allocation of your marketing budget.

Starbucks is clearly an established brand, and with 33 percent of the market share, it is the leader in coffee sales. Yet, compared to most leading consumer brands it spends less on traditional marketing. In 2010, the company actually doubled its spend on marketing, according an article in Advertising Age. The company spent only $97.6 million — about one percent of the coffee chain’s U.S. sales. A large portion of the company’s marketing dollars are invested in digital and social media with a focus on engaging customers in what they call, “the customer experience.”

For smaller companies with more limited budgets, Starbucks serves as an interesting example of what you can do spending less. Using Facebook and individually designed websites, such as MyStarbucksIdea, customers are encouraged to make suggestions and share ideas. For the company’s 40th anniversary, it launched MyStarbucksSignature, a website that lets customers create customized drinks.

Utilizing social media

Employing online advertising and utilizing social media can be one of the most cost-effective marketing tools available. But business owners are mistaken if they think it’s free. Social Media marketing requires an investment of time and/or money, or both. Other cost-effective marketing tools to employ include public relations, grassroots guerrilla marketing, and community outreach. Regardless of what you do, the key is consistency and repetition.

As you create your marketing plan, think about how much you can afford to invest and where you may want to spend it. Then, when you think you can’t possibly allocate 10 percent of your gross revenues, realize that if you want your company to succeed, you can’t afford not to.

selling your business

6 Steps To Selling Your Business

Don’t ignore one of the most vital elements of your business plan, the exit strategy. Here are key business practices for selling your business.


If you’re a typical small business owner, you spend more of your time working on today’s issues than tomorrow’s potential. That may keep the doors open for now, but what about when you’re ready to retire, or no longer have the will or energy to run your business?

As mid to large businesses grow, owners typically realize they’ll need to find a way out, but most small business owners do not have an exit strategy. Rather than simply selling inventory and closing the doors, the suggestion is that small business owners can increase their wealth by capitalizing on the goodwill or customer base they’ve built up.

Here are some basic business practices that many entrepreneurs overlook, but can help keep the company buffed up and ready for the marketplace.

Key business practices for selling your business:

1. Write down the business processes

You can’t sell a business that is in your head. So, you need to write it down. Entrepreneurs don’t typically like dealing with details and the fine points, but you must document how everything works in your organization.

For example, spell out the roles of management and employees, not titles, but their actual responsibilities. Or, describe a typical customer visit. Franchise companies list these types of details; a small business owner can use the same tactics to show the value of their company to a potential buyer.

2. Set financial goals

You cannot sell a business that is not making money. And, how do you know if you’re growing if you don’t know where you started and where you’re going? Once you’ve set some target goals, measure them on a regular basis. Look at the internal processes of your business and make sure they are still working for your customers and your company alike. You may be pleasing customers, but are you making money? Know what your return on investment is, so you can explain it to those interested in buying your company.

3. Have a marketing budget and plan

Many small business owners don’t allocate money for marketing. A marketing plan, with a corresponding budget, is key to attracting and keeping customers. One rule of thumb is to spend the equivalent of one staff salary on your marketing and advertising. Think of it as your “silent” employee working 24/7. Market awareness of your brand and demonstrated customer loyalty can dramatically increase the value to potential purchasers. Marketing is the last thing you cut even if times are bad.

4. Keep track of customer information

Often, the most valuable aspect of a business to a potential buyer is your customer list, especially if your potential buyer is a competitor. Keeping track of customer contact information, including name, address, phone number and email (along with permission to contact them electronically), is a must. Being able to deliver customer profiles and buying habits to a new owner demonstrates how well your business is run and makes your customer list invaluable. If business owners don’t have customer data, they’ll be in trouble.

5. Keep employees in the loop

Your staff represents your company to customers and buyers alike. Make sure they know your goals. Communicate with your employees and ask for ideas. They can help you dress the business up for sale. If you’ve decided to sell because the business is in trouble, let them know. It is unlikely to be a surprise and few things demoralize a staff more than having to rely on water cooler rumors. Try to avoid staff salary cuts if possible. Your people are the face of your business and a salary cut may backfire. Try looking at your business processes and finding ways to save money instead.

6. Get professional advice

Identify the areas of your operation that need improvement and look for specialized help to simplify your processes. Make sure to test them before the potential buyer does. There are consulting professionals on a part-time basis who have knowledge implementing transition strategies for businesses and can help you, for a reduced fee.

So, don’t ignore one of the most vital elements of your business plan, the exit strategy. With careful planning and monitoring from day one, your last days of business can bring rich rewards.

For more information about selling your business and/or B2B CFO, visit b2bcfo.com.