For so many of us “budget” can seem a scary word but it is such an important tool for all businesses. Recently I’ve had the opportunity to work with a small business that had never set a budget and listening to their challenges has really cemented for me how important the budget process is.
Not only does a budget allow you to identify where and what you need to spend money on it also helps create the basis of a plan. Identifying when the majority of your spend needs to occur, based on sales and customer seasonality and demand, makes sure that you know what you need to forward plan and how much of your sales needs to be banked for those important dates. This will also help you to manage any suppliers that you have supporting your marketing activity
Now, creating a budget can be as simple or as complex as you like. If you like detail and numbers (I confess, I do) then creating a detailed list of all of the activity and elements that you want to spend on your marketing activity can be a fun and interesting exercise. Getting right into the detail will make it easier to manage your budget throughout the financial year and give you confidence in being able to move funds around as you might need to.
On the other hand, if you hated maths in school and just want to build a high level budget this is a good starting point also. The only caution that I will raise is that you need to be confident in your ability to remember exactly what activity you had planned for that spend each month so that you don’t accidentally over commit in one area, sacrificing potential results in another.
So, where do you start.
Before we start working through the build, I recommend having a copy of the template that you built in Step 1 (re-visit it here ) as a great reference point. Knowing what you spent previously in particular areas, even if you’ve deemed that to not be quite right, is a nice base to build from.
Step 1 – Understand your seasonal dependence.
All businesses struggle from an element of seasonality which is influenced either by product demand or external environment factors (commonly Mother Nature). A business such as a coffee shop is likely to be in demand all year as many people continue to require a daily hit of caffeine to make it through, however depending on the location of the physical store you may find that you are influenced by wavering traffic throughout the year. If you are within a CBD zone, your Christmas / New Year period is likely to be a lot slower compared to a coffee shop on a beach strip which will have increased demand during key tourist time. Even funeral homes will see a seasonal affect of cold weather influencing the number of deaths, therefore demand, at times of the year.
Start by sitting down and reviewing your numbers, product sales from previous years. This will allow you to establish a trend and identify the influence that seasonality has on your business.
Step 2 – Identify when your marketing / customer research period is
Now remember, it’s important to note that if your business is seasonal you have to take into consideration the key time to market. If customers are purchasing at a particular time, you might need to get in front of them and create awareness of your business and products before they are shopping. It’s important to make sure that you are in the consideration set. This is fairly short term when it comes to coffee shops and fast food however for gardeners, landscapers, real estates, funeral directors, you need to make sure that you have brand presence prior to the need or purchase being made.
Step 3 – Who are you targeting
Before continuing to build a plan, you need to narrow your audience. Shouting from the roof tops and flooding the entire community with your brand possibly isn’t (and probably won’t be) the right thing to do and provide a good ROI. Being able to narrow your market and focus specifically on the customers that you want to get through your doors or contacting you will help you to drive your entire strategy. You can have a primary and secondary market, but your marketing activity must focus on your primary market so that you can reach the people who are more likely to deliver results for your business.
Step 4 – Know where to find your customers
So you now know when you need to market but the next, and quite possibly the make or break of your marketing activity, is knowing how to reach your customers and what media they are absorbing. This is challenging and you might want to get some advice in this area as there are so many different options and knowing which one is going to drive results is a little daunting! Have a think about your customers that you identified in Step 3. What media and channels are they likely to resonate to? Are they digital or do they still love reading a good magazine or newspaper at the breakfast table? Are they time poor – do you need to reach them at different hours that you trade? Are they in one location (i.e. nursing homes for funeral directors; 10kms around your store for general stores) or many? Do they influence their own decisions or are they influenced into purchasing particular brands or from particular companies by others (children / peers / influencers)?
All these questions need to be answered before you can clearly understand where your marketing investment needs to go.
Once you’ve established all of the above, you can draft a marketing calendar, penciling the times that you should be considering advertising versus times where your consumers might not be active / interested in your product. We will look to explore building a plan in a separate blog.
Now it’s your turn to go away and think about these questions. Write your answers, rest and go back to them. Don’t rush your responses as you might end up going down the wrong path.
Good luck.
The Marketing Elf
© April 2019
The Marketing Elf 