“I Spent All of My Money on (My Product, My Building, Technology) and I Have No Money for Marketing and Public Relations”

Most of the time I hear this from new or start-up businesses, but sometimes I hear it from established businesses, as well.

Why This Makes Me Cringe (and Not for the Reason You Might Think)

You might think that I hate hearing this line because it means that someone doesn’t have a lot of money to spend. But that’s okay, because I have many do-it-yourself Public Relations and Marketing products that can fit any budget.
The real reason I cringe when I hear this is because:

• These business owners aren’t equating marketing and P.R. as investments, as they do the other places where they put their money.
• They devalue my expertise (unconsciously), by saying that they have been willing to spend (sometimes a lot of) money on everything else, but not with me.

Imagine this conversation: Let’s say I call up a company and say, “I’d like to inquire about your products.” And you say, “Great, what would you like?” And I say, “Well, I’ve spent all of my money on marketing and P.R., so I don’t have any money for your products.” Kind of puts a damper on the conversation, doesn’t it?

The good news: I have one answer that applies to everyone. And here it is:

The right marketing budget is always more than $0.

If you think I’m joking, I can tell you that the second most frequent comment I get is: My budget is $0.

Here’s the issue: If you don’t market and sell your product or service, then there really is no business. Even companies in the business of marketing and P.R. know they have to spend money on marketing and P.R.

Here are some places where you can spend marketing dollars:

• Web site creation and design
• Email marketing
• Online advertising (Google Adwords, banners, etc.)
• Print and broadcast advertising
• Design and printing costs for all print materials, such as business cards, letterhead, newsletters, brochures, etc.
• Public Relations
• Trade shows
• Any other special events needed

So How Much Should I Spend on Each Area?

Ah, that is the question. And let me tell you that even though I was a Finance major and have an MBA, I still hate creating budgets. But they are necessary to run a business.

Now before I go into this, I promise that I will get tons of disagreement on this, as the one thing that everyone agrees on is that there is no “one” way to create a marketing budget. So I’ll just go with this anyway:

The most popular method of setting up a marketing budget is to budget marketing as a percentage of sales. The average allocation usually ranges between 9-12% of the annual budget, while the smallest businesses may go as low as 2%. If a business is launching a new product or service, advertising and publicity needs are greater, so the percentage will increase. The main advantage to using a percentage of sales is that the marketing budget will increase, or decrease, with the sales revenue of the company.

This means that the newer your business, the more you should spend on marketing and promotion. Kind of lousy, huh? Just when you have all of these start-up expenses, you have to spend more on marketing and promotion. But that’s the way it is – because people don’t know about you yet. After being in business for over eight years, I get business coming my way all the time, without spending a dime. But it happens because I spent more money initially on marketing.

You have been in business three years and decide you want to allocate 10% of your budget to marketing, or $10,000.

Here is one scenario for your annual marketing investment:

• Web Site Updates (this assumes you already have a Web site): $3,000
• E-mail Marketing: $2,000
• Google Adwords: $2,000
• Public Relations: $2,000
• Printing: $1,000

After deciding this is a workable budget, here is how you would determine what you can do and what you can outsource:

1. Web Site Updates: Outsource

2. E-mail Marketing: You can probably have someone design your emails for you, but you’ll need to write the text for the emails and pay for an email system to send and track your programs (such as Constant Contact or 1shoppingcart), so you’ll probably have to manage that yourself

3. Google Adwords: You’ll have to write the Ads and manage that yourself – it’s a low budget

4. Public Relations: You’ll have to do it yourself; you can invest in DIY PR products and databases of media contacts

5. Printing: Outsource

So don’t make potential marketing and public relations vendors cringe. Create a basic marketing budget, and you can have real conversations with your vendors, and a business with a plan to grow.

source: http://zfpr.com/blog/wordpress/2011/02/24/how-to-create-a-public-relations-budget/