In order for your small business brand to grow and flourish, you will need to actively market your product, service, and even yourself. Common marketing mistakes include underspending on customer-facing efforts or overspending to reach a specific target audience. Your small business can avoid these costly missteps by crafting a careful marketing plan that includes a clear marketing budget.

A comprehensive marketing plan should outline the following: research on your business’ target market(s), your ranking in the competitive market, clear tactics for reaching your target market(s), and an in-depth understanding of what sets your business apart from competitors. Budgeting is also an important facet of your marketing plan. Here are the 6 steps for creating an efficient marketing budget that will allow your business to achieve its marketing goals:

No. 1: Study your sales funnel. To be accurate and effective, your small business will need to know its results and analytics throughout the revenue cycle. You can easily obtain this data from marketing automation software or your CRM system. Be on the lookout for the following numbers:

• Website visits per month
• Leads generated per month
• Leads converted to sales qualified leads (SQLs)
• The cost attached to generating SQLs (website development, outsourced content creation, Pay-Per-Click, time spent by marketing and/or sales to nurture these leads, etc.)
• Leads that convert into opportunities
• Opportunities that close as new deals
• Value/revenue of a new deal

No. 2: Identify your operational costs. After mapping out your sales funnel, you will need to pinpoint your business’ operational costs. This will include the following:

• Cost, time, and labor for delivering contacts
• Internal staff capacity
• Additional headcount and subsequent employee benefits cost
• Costs of hiring an agency (though upfront costs will be higher than in-house efforts, the results and return on investment could justify the additional expenditures)
• Estimated costs resulting from inaction

No. 3: Plan your budget around your business’ overall marketing goals. Your business should never budget its marketing simply on what’s left over from operational costs and other expenses. Typically, small businesses set aside 7 to 8 percent of their revenue for marketing. Brand development costs include but are not limited to events, advertising, campaigns, sales collateral, promotion costs, blogs, and websites. With so many options available, your business will need to narrow its focus through the lens of its specific goals. Be sure to develop your small business’ targets, keeping the following in mind:

• Objectives for the quarter
• Objectives for the year
• Objectives three years out
• How many conversions you will need to achieve the above objectives

No. 4: Reframe your marketing budget as an investment. It will be key for your small business to embrace marketing as a long-term, continuous game. When marketing budgets come from the top of a company, marketing teams could potentially be viewed as cost centers and the endeavor itself to be a large expense. This makes it easy to decide whether or not to spend more or less on marketing every quarter or year. However, your small business will see the best results from its marketing efforts if they remain consistent.

No. 5: Find out if your business is in growth mode or planning mode. When establishing your marketing budget, you ought to know which cycle or mode your brand inhabits at that time. If your small business is experiencing growth mode, generating more revenue at a faster rate is key. In this mode, you will want to buy into quick-win marketing techniques, or use this time to further streamline your business’ website. On the other hand, planning mode promotes slower, steadier growth rather than spikes in revenue. During this time, your brand will want to focus on earned media, a long-term approach to marketing. Valuable inbound marketing content can be posted on social media or your business’ blog and even shared through press releases.

No. 6: Explore current and future trends. While traditional marketing approaches should be included in your marketing strategy and budget, your small business will also want to utilize emerging trends and technologies. Before fully implementing a new marketing outreach, your brand will need to research and test it to determine if it’s successful in reaching your target audience. For example, if a large chunk of your audience is reached via email, then your business might want to consider these newer capabilities: contact insights, email tracking, and email scheduling. The bottom line for your marketing budget should be whichever form of communication your audience is most likely to respond to.

Blog by Melissa McElhose, the NALA staff writer