Building a Marketing Budget
We have considered all of our marketing options, set our marketing goals, identified our marketing objectives, and prepared the tasks to be performed; however, our marketing plan is not complete until we determine the costs of implementing each of these elements. A marketing budget is an important part of our marketing plan.
The marketing budget is an estimation of the costs associated with the various tasks.
The tasks could be:
- Staff time
- Related Expenses
The goal of the budgeting process is to distribute expenses over a period of time, typically by month and year, to assure moneys are available, as needed.
The easiest way to arrange financial information is to establish a format on a spreadsheet. Here is a simple example form: (Click to see it larger)
Across the top of the spreadsheet, list the headers for each marketing expense. For example: salaries, office expenses, development expenses, rental expenses, design expenses, promotion expenses, public relations expenses, technical design/support, etc. Along the left side of the spreadsheet is a wider than usual column to list each project, tasks and sub-tasks discussed in Part II.
The arrangement of your budget format will be dependent upon how you plan to use the information displayed. Make sure you give careful attention to items included during this phase of formatting your marketing budget.
Designing the Budget to Meet Your Business Needs
Your marketing budget will vary depending upon the type and size of business you own. Thus, if you own a small retail store, you may need only a few headers, along the top of your spreadsheet, for staff salaries, product promotion, newspaper advertising, direct mail advertising, web design/support, etc. On the other hand, if you operate a large, complex business with several product lines or plan to expand into a new marketing area, you will require a far more complex approach that may require more than one marketing budget plan for the various projects. Another factor to consider is how do you plan to use your marketing budget? If you are only interested in anticipating monthly or annual expenditures, a simple chartof expense categories may be sufficient. If you intend to monitor your marketing efforts over a period of years, you may want to consider a historical method of measuring each expenditure category by changes in business trends, market conditions, or alterations in your marketing approach. This will requireadditional columns that track percent changes or dollars of sales, or volume of sales, or costs from year to year. A comparison of sales volume to budgeted expenditures is a practical first step in this regard. Whatever comparative factors you use, keep the standards realistic and related to specific outcomes.
One Final Thought
For best results, connect the marketing budget to the company’s volume of sales and profit margins. Using past financial data, which measures marketing expenses as they relate to product or service performance, can be very useful in predicting future sales as well as potential problems. Once you have identified the budget method and format, stay within the framework you have selected, this will assure a consistent and easy to follow financial history as you implement your marketing strategy.Part IV will focus on evaluation tools that may assist in considering future marketing plans. Please let us know if this has been of any help and, as always, your comments and suggestions are welcomed.