Strategies for Developing a Successful Advertising Budget
Many small to mid size businesses benefit from looking at what it takes to create and maintain an effective advertising budget. A successful advertising budget is an investment for your business, and is necessary for growth. There are a few tips you need to know in order to develop this tool, utilize your company’s income proactively, and create an advertising budget.
All businesses are different, and the same goes for their advertising budgets and investments. Some companies take a portion of their sales and dedicate it to advertising, while others may diversify their own funds in order to pay for advertisements. One thing that you need to remember is that advertising does work, and without advertising a business has a higher chance of failing. In our market today, 65% of businesses don't advertise at all. Alongside that, 50% of small businesses fail in the first year, and 95% fail within the first 5 years. Advertising is a necessity in order for any business to survive, succeed and grow.
Depending on your particular business, your advertising budget could be on a different scale. The general rule for an advertising budget is to use 10% of your gross sales revenue, but this could vary slightly when it comes to a certain brand or type of small business. The variations of the budget could take into account the income of the business, regular business expenses (salaries, operating costs, and other deductibles), and future expenses that could affect the company financially such as larger projects or a new office space. Using factors such as these can help you figure out exactly what you should invest in advertising.
The best plan of action for advertising is to attract the consumer to your product, then maintain them as your client as long as possible. Small businesses tend to prosper with long-term partners, so finding lots of companies or consumers to partner with is key to survival. This can be achieved through successful advertising, and determining this client should be on your mind when forming an advertising budget. If your future goals are to attract a certain type of customers, then the advertising should reflect that. For example, advertising on local transit would possibly attract the environmental consumer or partnering with a local music festival could appeal to other talent. By defining what clients you want to interest, you can pick and choose what plans work best for your advertising budget.
Another thought that comes up when molding an advertising budget is the difference between short-term and long-term investments. If you use 75% of your advertising budget on one event, you run the risk of losing name recognition quickly and wasting most of those funds. Many small businesses are not able to risk the majority of their advertising budget, so the key is to find small and effective advertisements to bring in more revenue. Advertising is a marathon, not a sprint; constant paced exposure is better than placing all of your effort into one part of the race. Over time, the advertising will work and your business will benefit from it.
Advertising to a business is like air, food and water for you and I to survive. While some business owners choose not to advertise, they are also choosing to potentially let their business fail. Even though it may start slowly, investing in advertising is vital to keeping a business alive. Whatever advertising you choose to do, whether it is a 30-second radio ad, transit advertising, or smaller sponsorships to events or festivals, you have to make a long term commitment for your investment to work. It may take a longer time to see a large spike in sales, but the gradual climb will pay off in the long run. Making a quick buck does not usually lead to success, rather a smart and long-term advertising plan is the best option. Don’t get caught up in some sales pitch to deliver a flood of customers now. Unless you are going out of business, advertising takes time.
There are things to remember when planning an advertising budget. Depending on your business’ situation, make sure to use the right amount of resources that will produce a successful result from the advertising. Each business owner should establish their budget first and then look at advertising options that meet their needs to deliver the results you want. Investing money to make money is smart, but making sure the right amount is spent is smarter.
Affordable advertising is not out of reach! For more information on creating an advertising budget, contact firstname.lastname@example.org to learn about different advertising investment strategies to meet your business needs.