As a local business you are most likely wondering how much you should spend on marketing. There is a rule of thumb. Generally speaking you can calculate your company’s ideal marketing budget. If you want to maintain your current market visibility you should plan on spending 5% of your total revenue. If you are looking to see your businesses grow and gain a larger market share then you should plan to spend 10% of your total revenue on marketing. Of course it is not always cut and dry. Other things to consider would be how tough your competition is, the age of your business, your business credibility, and whether or not you’ve established branding. If you are a new kid on the block you may expect to spend considerably more on marketing just because you have yet to establish a name for yourself. The faster you can gain recognition the better off your business will be. This means that when making your business plan you want to have a fairly large marketing budget that will get you on the map so that you can dial back on those expenses sooner rather than later.
In general the 5% and 10% rules are based on companies that have at least a six figure total revenue income. If you have not reach this level yet you’re going to have to consider that you must spend at least what your competition spends. This is not an easy thing to find out I guarantee you that if you call your competitor he’s not going to tell you what he spends. You can certainly browse the web and see how many times your competitor places Adwords ads. You can use keyword tools in Adwords to see approximately the cost per click for each key word you would like to rank for. Check local print advertising for your competition also. You should be able to call the publishers to get an idea of what a similar ad will cost you.
When you first start a local service business it may be necessary for you to buy leads. There are several sources for these including Angie’s list and Homeadvisor. Be careful these options while they sound good can become quite costly and have a low ROI. This is because the services do not sell leads exclusively to your business. On top of having to pay for leads you also have to outbid your competitors. If you do not have a website you may have to resort to using these lead services.
In today’s digital marketing climate, it is unthinkable for a new business at expects to succeed would fail to build a website. Unfortunately, this is also one area where businesses tend to skimp. Many businesses choose to build out their own website or have family or friends take on that task. There is nothing wrong with this approach if the individual is also aware of marketing standards and requirements that must be met in order for the website to generate business. If the web builder does not have SEO experience. It would be wise to seek out a reputable firm to handle optimizing your website. Without optimization, the website is just an expense. We hope to cover the topic of finding a reputable SEO firm in our next installation.
Hope you found this post hopeful. Now it is your turn to do little homework. Go over your business plan and make sure that you have allocated sufficient funds for marketing. One thing that is sure to kill a new business is not being able to grow fast enough. Lack of marketing funds will definitely put a stake in the heart of the struggling business.