At first, I thought these were isolated incidents, but have come to the conclusion that this is all too common. And, the size of the business doesn't change the "no" answer I often get.
As you would expect, small businesses that are just starting out and have no annual sales to speak of often do not have a marketing budget, although they should. But what truly surprises me is that companies of all sizes who have been in business for one to five years also have this same issue. I recently asked a fairly new company of less than 2 years with a $5 MM annual revenue the same question, and got the same answer…no.
WHY WHY WHY
Why would you do this to your business? Why would you create a service or product and not have a budget for marketing? This is not a rhetorical question. It really doesn't matter your level of enthusiasm you have for your product or service, it's not going to make the cash register ring. Your customers won't ever hear or know of your business without marketing, and in some cases advertising. And, you can't market without a budget. Unless, of course, you're not interested in or have no need to make money, any time soon.
Let's back up a minute…when I say marketing, I'm not talking "networking". That's a small portion of marketing for a product or service. Marketing occurs in your communications and nurturing those contacts you've made over the years. But, in reality, I'm talking about a budget for SEO, branding, advertising, social media and strategy development. There are more elements of marketing, but you get the idea. You must be found. You must deliver a great message. And, you must deliver that message to the right people. Folks, that's what I mean when I use the term marketing.
BUILD IT & THEY WILL COME
There are over one billion websites in the online stratosphere. Having a website is not going to "sell" your product. Oh wait, you can't afford to have a website built, so you did it yourself, even though you're not a designer. A recent study showed 52% of small businesses do NOT have a website and another 90% do not have a website that is mobile optimized.
What does that mean…it means You Built It & No One Is Coming! Or maybe, you decided to just have a Facebook company page. If this is you, please, please, please read my previous post Own Your Assets.
Having a product without a marketing plan and budget is a sure fire way to be one of the 80% of businesses who fail every year.
In my mind, having no marketing budget is a fatal flaw. This is only made worse by spending money without having a marketing strategy (and budget). Random marketing with no rhyme or reason, is, let's just say, "dumb".
Would you start a home remodeling project without a budget? I'm pretty sure unless you are Bill Gates, Warren Buffet or Richard Branson you HAVE a budget. I'm pretty sure when Gates, Buffet and Branson develop products and services they HAVE a marketing budget.
Yet, according to one study, only 23% of small businesses spend any dollars on marketing. Really, I honestly believe the reports that say 1 in 4 small businesses do NOT spend any dollars on marketing. And, of those that do 56% spend less than $500/month.
Your budget should depend on your business goals. How aggressive are your goals relative to last years results? Are you okay with really, really slow organic growth? Which, by the way, still doesn't mean you don't have a marketing budget.
Did you ever wonder why all business plan templates include marketing as a budgetable item? It's because it's crucial to your success. Even if you have a limited marketing budget, it doesn't mean you just spend your dollars willy nilly. This is where it becomes just as important for those with limited budgets, as it is for well-funded businesses to have a marketing strategy.
HOW BIG SHOULD IT BE
Here are some guidelines on how big your marketing budget should be? On average, your marketing budget should be 6-10% of your annual revenue target. You say I can't afford that. I say you're not ready to be a business owner, or at least be taken seriously.
Marketing is an investment in your business' future success. How long are you willing to wait? How long can you wait before you realize your business is failing?
If you knew spending effectively on a solid marketing strategy would get you results, would you do it? I bet I'd be surprised to hear the answers…what do you think? Share your thoughts in the comments fields below.
Another No Moss Brands post you might enjoy The Top 5 Things That Make Your Business Look Like an Amateur!