What should new businesses know about marketing? Don’t skimp

What should new businesses know about marketing? Don’t skimp

When you’re getting a business off the ground, money can be tight. And while some expenses are hard and fast – the costs of materials, technology and rent, for example – the dollars you dedicate to marketing seem more flexible.

For that reason, startups and other fledgling businesses all too often skimp when it comes to getting the word out about their goods or services.

This can be a fatal mistake.

As a writer for the Small Business Administration puts it, “Products and services don’t sell themselves. By ignoring marketing until it’s too late, many small businesses risk hitting a brick wall and, quite possibly, failing.”

In fact, spending on marketing should be a priority – and will probably take a larger bite of your budget – in the beginning. After all, that’s when you are trying to build your brand as well as sell your goods and services.

Marketing: An investment

One bit of good advice put forth by Jim Miller writing for Inc. is to think of what you spend on marketing as an investment instead of just an expense. To do that, you’ll want to set up ways to measure return on investment. For instance, did that online ad result in clicks on your website that sold X number of gadgets?

When it comes to setting your marketing budget, there are a few different approaches and guidelines.

According to the Small Business Administration, “… small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing.”

This budget covers two important components:

• brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.)
• the costs of promoting your business (campaigns, advertising, events, etc.)

The assumption with this is that you have a margin of 10 to 20 percent after covering all other expenses. If your margin is less than that, the SBA’s advice is to trim expenses in areas other than marketing.

That’s a hard choice for most small businesses (even those of us in the PR/marketing field!) but it’s the right one – if the marketing is strategic, done well and targeted to the right people through the most effective channels.

But, as we say at First Class Communication, when you get the right message to the right people, good things happen!