What is the importance of budgeting in MARKETING?

Running a business often requires owners to carefully plan and review their finances. Most companies use some form of accounting for identifying, measuring, analyzing and reporting their financial information. Accounting tools may include budgeting, financial statements, forecasts and other tools for managing financial information. Business budgets for maybe one of the most important accounting tools of company may use in their business.

What does a marketing budget include?

Your marketing budget will include all of the prices that you expect to pay for each type of advertising you do. This would include printed materials, website development and ongoing maintenance and search engine optimization. It would also include radio and commercials, trade shows, advertisements in newspapers and other publications, mailings, etc.

How much should a business spend on marketing in their budget?

The amount of money a company should budget for marketing varies greatly by industry and business size. The US Small Business Administration and the Counselors to America’s Small Business define the variable for a proper marketing budget to be between2% and10% of sales. Some companies spend up to20% of net sales. The average is between4% and6%.

Are there guidelines that help determine what a marketing budget should be?

There are guidelines that should be considered when setting your marketing budget.

• First consider any development or refinement of your current branding. Is your image up to par? Do you have the professional logo, website and marketing materials in place that represent you as a credible company? Is there consistency in the look and feel of your materials? If not, what needs to be revamped?
• Second, what are the ongoing expenses of advertising, maintaining and promoting your brand to your target audience? If you stop advertising, they will forget you. If you don’t keep your website and materials up to date, you will lose credibility and rankings with the search engines. So what is your plan for keeping your company visible and what will it cost?
• You can visit the Small Business Administration (Sba.gov) for more guidelines and information. They have charts that compare revenue with ideal marketing budget percentages. They also list variables that need to be considered.

Marketing is a fundamental ingredient for growth and profitability. Many companies fail simply because they do not allocate enough money for marketing. When done properly, marketing brings back sold returns.