Business Owners Say You should Put 28% of Your Budget Toward Marketing

In the United States, small businesses play an important role in many industries. A report by the U.S. Small Business Administration indicates there are 29.6 million small businesses, employing 47.8% of United States employees. With so many people relying on small businesses it is only natural that success and growth are major goals for small business owners.

Results from a survey conducted by Kabbage show that 72% of small business owners hope to increase revenue by over 20% in 2018.

The Kabbage study included 500 small businesses of different ages, that provide a range of services and skills in various industries. The aim was to assess the factors required for successful growth and learn how new small business owners can apply these to achieve their own goals.

Key findings…

Many owners of older businesses regret not putting a greater importance on investing more in marketing sooner. In hindsight, 28% of the owners surveyed, wished they had known more about marketing strategies earlier in order to increase the growth of the business.

In general, in the first 20 years, businesses are likely to only invest 8% of their total expenditure in marketing. Most owners of older businesses in the survey regret this decision. They wished they had spent triple this budget or more.

Marketing represents on average 7% of the overall budget of small businesses in their first year. Recent recommendations from business owners suggest it would be better to invest more like 28% in the first year.

Continuing to invest in marketing at all stages of business lifespan is important to increase growth. In subsequent years businesses normally invest around 13% of their budget. Findings from the survey suggest also increasing this to 25%.

Small Business Marketing Tips

It is clear that marketing is an important investment for small businesses and should be incorporated into your budget. But where should you focus your investment to get results?

Here are some areas to concentrate on.

Reviews have more benefits than you may think. Positive reviews are a great low-cost marketing tool. Encouraging customers to leave reviews can aid marketing efforts. Positive reviews build up a businesses reputation and add credibility. They are also highly beneficial in attracting new customers. 73% of consumers trust a local business more if it has positive reviews according to BrightLocal’s 2017 survey. This can also lead to increased conversion rates and boost your rankings in search engine results pages.

Customer communication and interaction: A good outreach strategy for finding and communicating with customers is vital, especially for online businesses. Comprehensive strategies that include various forms of interaction on different channels, such as email, social media, phone and live chat can improve customer experience and build loyalty.

Content marketing and blog posts: Hosting a blog on your website and having a quality content marketing strategy can be beneficial for small businesses. Producing great, engaging content is favored by search engines. It can improve SEO rankings and provides the opportunity for you to reach new clients, even those not specifically looking for you. Blog posts help establish a company's credibility, provide an easy way for customers to keep up to date with industry and company developments and also increase your likeability.

Social media is an important low-cost marketing channel. With millions of people using social media platforms daily, a large percentage of them use it to make buying decisions. Therefore it is important for your business to have a positive presence on social media and utilize the marketing opportunity.

One thing to be aware of is that it may not be necessary to be present on all the social media channels. Depending on your target audience some may be more successful than others. Analysing where your main customer base is and what content they respond to most, will help define where you should focus your efforts for the best results.

Marketing Resources

Content marketing and social media are important components of any marketing strategy. Content management systems (CMS) are online applications where you can create, edit and manage your content.

Two very useful options for small businesses are Wordpress or Squarespace they offer a platform and marketing tools to grow your business. They provide customer support, and you can create quality content and blogs, without the need for advanced technical skills.

Having a great marketing strategy and investing the time and money to implement it, is not all that is required. Keeping track of everything to identify what works and what needs help is equally important. This enables businesses to update their marketing strategy and make changes, as needed, in order to reach their goals.

Google Analytics offers powerful analytic solutions for businesses of all sizes. Using the free tools you can track website traffic and get a detailed view of who visits your page and what content is most successful. This analysis provides valuable information about your audience and is useful for market research and development.

There are also apps available to help manage your social media presence. There are various paid and free options to choose from. One example is Hootsuite where you can manage all your social media content in one place. With Hootsuite you can manage multiple social profiles, schedule posts in advance and also track analytics to continually assess how well you are reaching your audience.

Marketing is a key investment for all businesses and there are various channels and resources available to help. Despite this, it is often underrepresented in small business budgets. With the main goal of many business owners being to grow and increase revenue, marketing should not be overlooked.

Results from surveys, such as that carried out by Kabbage, show that many small business owners regret not investing more in marketing tools and strategies earlier. In hindsight, these business owners would increase the amount they invested in marketing to 28% of the business budget.