A business branding budget can sometimes be difficult to identify, so there is a simple question that I typically ask when beginning client engagements: “What’s your budget?” It’s a question that helps me better understand where that business is at and what kind of resources are available to help it grow. Some business owners, however, get nervous at the budget question. Here are some of the underlying issues that make the budget question seem scary, and how to address those fears.
“I really don’t know what this is supposed to cost, and I don’t want to look like an idiot for asking”
If prior to starting your business you weren’t involved in the marketing industry or exposed to advertising budgets, you likely don’t have a frame of reference for what constitutes appropriate branding and marketing spends. No one likes to feel foolish. The good news? Having this fear demonstrates that you see the value in branding and marketing and inherently respect how it can help grow your business. A little education can help eliminate this fear. Fortunately, there are some standard numbers that can give you an idea of what you can budget for your business:
As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).
This percentage also assumes you have margins in the range of 10-12 percent (after you’ve covered your other expenses, including marketing).
Of course, determining your business branding budget is only part of the equation. Knowing how to best spend it effectively is the next step, and that’s where a trusted partner is invaluable.
“I’m worried my budget is too low and I’m embarrassed to share it.”
The budget question is not just about money, it’s about trust and appropriate fit. If you only had $10K to spend on a car, you wouldn’t go shopping at the Ferrari dealership. However, with $10K you can still buy a perfectly reliable vehicle that gets you wherever you need to go. It might even be a car you enjoy driving, with features and aesthetics that fit your personality. Maybe it’s not something you’re going to run at Autodromo Nazionale Monza, but it will certainly be a better daily driver than that Ferrari.
The same can be said of your business branding budget. Knowing what that budget is allows you to get the best possible bang for your buck. That may mean a comprehensive rebrand, new literature to support the sales team, a targeted SEO strategy, or all of the above. Being transparent with your budget allows branding and marketing partners to provide the most effective strategy and deliverables. But that requires trust, which brings us to the next common fear…
“If I tell them my budget, they’re going to spend every penny of it.”
Sometimes potential clients like to play a game of budgeting chicken, refusing to be the first to throw out any numbers. They worry that if their budget is higher than what would be typically billed for the work, the contracted firm will eagerly increase their fee to pocket the extra cash. This thinking could indicate a couple of underlying issues. First, you don’t trust the firm that your are engaged with. Second, you don’t value the what good branding and marketing can do, and instead view it as a commodity to get at the lowest possible cost.
If you’ve just begun exploring working with a branding or marketing firm, it’s understandable that you haven’t developed a trust relationship yet. That takes time. Cost, however, should not be the determining factor in development of that trust. Ask these questions instead:
- Does this firm seem engaged in learning about my business?
- Have they asked what we’ve done successfully in the past, and what hasn’t worked quite as well?
- Do they seek to understand or help us define our unique value proposition?
- Are they interested in learning about our competitors and what makes us unique in the marketplace?
- Can I envision them as a potential partner that is genuinely interested in helping grow my business?
- What expertise and experience do they bring that inspires confidence in their abilities?
Reputable firms don’t want to spend all of your money. They want to develop a lasting relationship based on trust and mutual business benefit.
At Go Big, we know we’ve done our job well when a business client outgrows our firm. This means their brand is clearly defined, the entire organization is well versed in brand messaging, and they’ve grown large enough to hire staff and bring marketing in-house.
“I actually have no idea what my budget is, and I’m hoping they just throw a number at me so I can see if I can afford it.”
At there risk of mixing too many metaphors, this isn’t a chicken and egg problem, it’s a cart before the horse one. Please do not start throwing money at marketing hoping that something will stick. First, in the unlikely chance this works, you’ll have no idea why or how to duplicate it, which brings you back to square one. More importantly, if you don’t have any idea of what your budget is, then your business probably isn’t positioned to undertake any kind of deliberate marketing effort. Spending resources without a plan is a surefire way to ensure failure.
Moving Forward in Developing Your Business Branding Budget
Most firms are happy to do an initial consult free of charge. Having this conversation early allows you gage what it will be like to work with that firm, ask any questions you might have, brainstorm some possible avenues to success, and develop a game plan moving forward. This discussion provides clarity and helps bring the budgeting issue into focus. You can then take a hard look at what resources are available and identify funding necessary to bring in brand and marketing expertise. Don’t fear the “what’s your budget?” question, look it as an opportunity to hone in on a specific aspect of your business and begin to develop trust with potential business partners.