How Much Should You Spend On Your Marketing Budget?
In a competitive and ever changing business world, marketing can make or break a company, but how much should you spend on your marketing budget? There is certainly no one-size-fits-all answer to that question. In this article, team4 looks at what a marketing budget involves, the criteria you should use to establish how much you spend and what is considered an allowable marketing expense.
What Is a Marketing Budget?
“A marketing budget is an outline of the costs that a company will spend to market its product or service. The marketing budget covers a finite period of time, the length of which can be anywhere between a quarter to a year.”
It will need to include what your marketing goals are and how much you intend to spend. Marketing in itself encompasses a vast array of activities such as paid advertising, your marketing team or consultants, social media spending, leaflets and flyers and of course your website. It often helps if you can include a degree of flexibility.
Criteria for deciding how much to spend on your marketing budget
- Size and type
- Goals – establish short and long term goals including Key Performance Indicators (KPIs)
- How established – new up and coming or older and more established
- Understand your target audience – location, age, income, education, job titles etc.
- Comprehend your market and competition – demographics, customers, influencing factors etc.
- Optimal channels for reaching your audience
Opportunity Marketing suggests that between 5-15% of revenue is the acknowledged rule of thumb. However, your marketing budget should be set following a thorough analysis of your business, including the criteria we have outlined above.
What can you claim for marketing your business?
According to the UK Government website, you can claim allowable business expenses for:
- Advertising in newspapers or directories
- Bulk mail advertising (mailshots)
- Free samples
- Website costs
However, you cannot claim for entertaining clients, suppliers and customers and event hospitality.
When it comes to Subscriptions, you can claim for:
- Trade or professional journals
- Trade body or professional organisation membership if related to your business
You cannot claim for payments to political parties, gym membership fees or donations to charity, although you may be able to claim for sponsorship payments.
Controlling your marketing budget
Do your research to help you decide on the most effective marketing channels for your business. These could include video, blogging, social media, online advertising, events and/or print advertising. Once you have decided, and this may change, allocate the financial spend for each channel. You can then work out how much revenue and profit you should generate and how that will impact on your cash flow.
Choose the right accounting software for your business
Your marketing spend can then be tracked by your accounting software to give you a detailed breakdown of your marketing spending. This will also give you the data required in order to track performance over time, so you remain in complete control of the money you are spending. By understanding this, you can make more informed decisions in the future. You will know where you are spending the money, which channel brings the best ROI and of course how much you have spent. If you are unsure which accounting software would best suit your business, ask your bookkeeper or accountant.
How can team4 help you with your marketing budget and allowable expenses?
The latest blog from team4 did not set out to tell you how to market your business. However, it is clear to achieve success, your business must stand out from the crowd. In this way, you will grab the attention of your potential customers and clients. Without effective marketing, your business may struggle to compete in the market and reach your objectives. Your business is unique, which should be reflected in your marketing activities and budgeting strategy. Some of your marketing will fall into allowable expenses and if you want to understand more about your marketing spending and your ROI, we are happy to help. And of course, if you need to outsource your accounts, including setting up cost codes in your accounts software, please get in touch with team4 by calling us on +44(0)1825 763378 or email info@team4bookkeeping.co.uk to find out more.
