Now, if you’re like most small business owners in the professional services game, when you hear the phrase: “Marketing Budget” you probably burst out laughing (and maybe even cry a little bit inside, too).
In the small business realm, high falutin notions like a “budget” seem like a luxury.
Your “budget” is most likely culled from whatever’s left over after you cover your operating expenses and pay yourself a (reasonable) salary. (And hopefully that’s enough to fund a few dinners out with the ole significant other or, heaven forbid, a vacay of some sort. Oh, to dream…)
A budget, however, is an incredibly valuable tool. It can help you focus on efforts that genuinely improve your business. Additionally, defining a budget is an important factor in calculating the ROI (Return On Investment) of your marketing efforts.
And when it comes to establishing a budget, there are four inalienable truths:
First, you’ve gotta spend money to make money. In other words, it’s imperative that you invest in marketing if you hope to grow your business.
Secondly, you’ve got to know how much you can afford to spend in order to establish a budget of any sort.
Third, you need to be aware of and understand your funding options should you have a “budget shortfall.”
And finally, a budget is dynamic. It’s a living breathing entity, if you will, that you must continually analyze and adjust as necessary.
Now that we’ve clarified the reason and purpose behind creating a budget, let’s dive into a… Simple and painless, 4 step process to creating your own effective marketing budget:

1. Establish a Baseline

This is really an accounting exercise more than anything. But in order to commit funding to any business process, you need to clear on how much you can spend. And to do that, you need to be clear how much you’re earning.
But there’s a bit of a rub in computing this calculation. If yours is like most businesses, your earnings vary. Generally, there’s a range. So, let’s say your business earns from $8,000 to $15,000. Your “baseline” figure is at the bottom of the range, or $8,000.

2. Set Aside Necessary Funds

With a clear picture of your baseline revenue, the next step to allocate funds accordingly. Basically, you need to earmark a portion of your revenue for marketing.
And for most small businesses, 2%-5% of your monthly earnings is a good rule of thumb.
Keep in mind, however, this figure varies somewhat based on the stage your business is in. If you’re in the startup phase, you’re likely to spend more. Possibly even upwards of 10% of your monthly earnings or even higher.

3. Be Aware of And Understand Your Outside Funding Options

Returning to our first inalienable truth of budgeting — You’ve Gotta Spend Money to Make Money — simply decrying “there’s no money in the budget for marketing” is a mistake.
At some point, just about every business has borrowed money. In fact, borrowing supplemental operating funds is really just an “investment” in your business.
And this sort of investment boils down to which funding options make the most sense for your business.
(I’m no good with math, so I recommend you ask your accountant.)

4. Evaluate And Adjust

The final brick in building your marketing budget? Realizing there is no final brick. In other words, your marketing budget is a dynamic operation. And should be reevaluated and adjusted on a regular basis.
Important questions to consider include… Are the funds you’re investing in earning a reasonable rate of return? Should be spending more on certain tactics and less on others? Or should you eliminate certain tactics altogether and focus your efforts in other areas.

What Does Your Marketing Budget Look Like These Days?

Do you have a “marketing budget?” If so, has it helped your business? And if not, can you see how a budget could benefit your business? Drop by my Google+ page and share your thoughts and experiences.