Working out how much to spend on marketing

In a world of Google algorithms and too easily accessible information, a busy professional woman decides to embark on a journey to self-employment. As she planned and gathered her resources, she realised that in terms of her finances, how much should she spend on marketing her new business?

Google it

Like many before her, she turned to  Google for answers. The results were conflicting, with arbitrary percentages and terminology that needed clarification.

The five per cent rule

Looking at her screen, she is perplexed by the range of marketing budget recommendations. Does she follow the often-repeated 5% rule, or should she dig deeper to find a more tailored approach? As she pondered, she remembered the wise words of her mentor, who encouraged her to pursue knowledge over truth and to apply critical thinking in the face of uncertainty.

By the way, when starting out, the 5% rule means 5% of your revenue. That often means 5% of nothing.

Marketing terminology

A lightbulb moment: she realised the need to understand the nuances of marketing terminology. What's the difference between marketing, publicity, promotion, and sales, and how do they all fit together?

What is marketing?

Diving into the research and determined to untangle the web of confusion, she discovered that marketing is an umbrella term, encompassing everything from planning and decision-making to sales staff and support.

It is the process of promoting and selling products or services. The key is to create awareness, build relationships, and ultimately persuade people to choose your brand over others.

Publicity and advertising

Publicity and advertising, on the other hand, are promotional components aimed at generating leads and sales. Understanding these distinctions led to a better idea of how much to allocate to a marketing plan.

Bootstrapping may be the go

She soon recognised that her marketing spend would vastly differ from an established business. She faced bootstrapping her way to success with no revenue to draw from. But where there's a will, there's a way. She rolled up her sleeves and got to work, pouring her time and energy into building her sales revenue using whatever resources she had.

Another way to look at this is a make or buy decision. If she had the funds she might be able to afford to outsource to a freelancer,  to advise and set up her marketing and promotion. If she doesn't have the funds, then she has to use sweat equity to learn how to set things up herself.

Devise a simple model

She devised a simple business model to guide her decisions. She estimated her revenue and costs, calculated her margin, and considered her projected sales. By breaking down these concepts into digestible components, she could determine the most appropriate marketing budget for her business, which didn't rely on arbitrary percentages.

Marketing and established businesses

The marketing spend for an established businesses enjoy a significant cost advantage with a percentage of their revenue paying for marketing managers, support, sales staff, advertising and promotion. However, they face many of the same challenges as a start-up when launching a new product. Our wise entrepreneur knew that to find success, she had to be adaptable and continuously learn from her experiences.

No one-size answer fits all

She understood that there was no one-size-fits-all answer to her marketing budget dilemma. Instead, she had to customise her approach based on her circumstances and business goals. By embracing the philosophy of continuous learning, adaptability, and applying philosophical concepts to real-world challenges, she became the master of her marketing destiny.

Seek knowledge and understanding, and above all, remain adaptable and open to learning.