As the owner of a newly launched small business, you probably face a constant barrage of demands for more funding for virtually every aspect of your company’s operations, including staffing, accounting, information technology, and customer service.
In the face of all these demands, it is not at all unusual for fledgling entrepreneurs to overlook the importance of marketing or to give it short shrift at best when it comes to budgeting.
If you’re tempted to take this path, you should pause and reflect for a moment on the very important role that marketing plays in determining the ultimate fate of your business.
Defies Easy Definition
As important as marketing is, it is such an all-encompassing aspect of your business that it’s hard to come up with a definition that truly captures all its many facets.
For that reason, we tend to go with the definition offered by pioneering marketer Regis McKenna in a 1991 article for the “Harvard Business Review” that was titled simply “Marketing Is Everything.”
McKenna’s three-word definition recognizes that virtually everything you do in operating your business ultimately shapes the way that consumers perceive your company and its brand.
The American Marketing Association (AMA) defines marketing as “the activity, set of institutions, and process for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” As concise as the AMA’s definition is, it too conveys the broad role that marketing plays.
No matter how ingenious your products or services may be, they’re unlikely to generate brisk sales if nobody knows about them. It may be a bit of a cliche, but it’s nevertheless true that it takes money to make money. And nowhere is that more true than in the area of marketing.
In its overview of marketing, the website of SCORE Delaware sagely observes: “If you do not effectively market your company, brand, image, and products or services, you won’t be in business for long.”
How Much to Budget
Hopefully, you’re now convinced of marketing’s importance, but your finances remain extremely limited and you’re still not sure how much you should allocate to your company’s marketing budget.
The Small Business Administration (SBA) recommends that small enterprises — those with gross revenues of less than $5 million — allocate 7 to 8 percent of those revenues to marketing. SBA further suggests that you split your marketing budget between brand development costs and the costs of promoting your business.
Brand Development Costs
Under the umbrella of brand development costs are the funds expended to operate all the in-house channels your business uses to promote its brand. These include blogs, your website, and sales collateral, which cover the online or printed materials that support your sales process.
Among the costs of promoting your business are advertising campaigns in outside media and the cost of running special events designed to drum up sales of your products and services.
If you’re in the early stages of launching your business, visit SBA.gov to learn more about the basics of marketing and budgeting tools: which ones you need in your toolbox.
Importance of Marketing Plan
To ensure that your marketing efforts are focused and get the maximum bang for the buck, you should draw up a marketing plan, which is every bit as essential to your business’s success as a business plan.
In the same way that drawing up a business plan requires the entrepreneur to plot logical steps in the startup of a new company, drafting a marketing plan forces you to map out specific measures that you will take to persuade potential customers to buy your products or services.
Laura Lake, About.com’s marketing guide, recommends that your marketing plan include the following components:
- Summary and Introduction: This portion of your marketing plan provides a synopsis of the main points of your proposed marketing strategy.
- Marketing Objectives: After analyzing your business’s strengths and witnesses, you should define the objectives you hope to achieve through implementation of your marketing plan.
- Situation Analysis: Assess the internal and external factors that provide the context in which your marketing plan must operate. Conduct a SWOT analysis to accurately pinpoint your Strengths, Weaknesses, Opportunities, and Threats.
- Target Markets: Although you might like to think your products and/or services have universal appeal, in all likelihood there are specific market segments to which your marketing message should be directed. Take the time to honestly pinpoint these markets accurately.
- Strategies: Here you will list the action steps you plan to take to achieve your plan’s marketing objectives. These should take into consideration the market variables of product, price, place, and promotion.
- Tracking and Evaluation: This part of your marketing plan should detail the ways in which you plan to track the various action steps of your plan and then evaluate their degree of success — or failure.
About the Author: Don Amerman is a freelance author who writes extensively about a wide array of business and personal finance topics.