Establishing a marketing budget—like any other business initiative—is never comfortable. It is a matter of business discipline. If you want to develop your business in a particular direction, investing in marketing will be a part of your larger business strategy.
• Do you want to grow to a particular level of sales revenue?
• Do you want to compete for specific kinds of projects more effectively?
• Do you want to become better established and visible in a specific geographic area?
• Do you want to develop a business that will be more resilient the next time the economy takes a dip?
• Do you want to develop a business that is not totally based on you as a person, but one that could be sold when you are ready to retire?
Marketing Budget Averages and Fluctuations
Generally, for small businesses that have been operating between one and five years, consultants recommend spending 12-20% of gross annual revenue on marketing. As a business becomes more established over time, and thus more profitable, its marketing budget shrinks to 6-12% of gross annual revenue. In times of flux, such as during a rebranding, or when the economy faces a company with headwinds, the budgeting expenditure will need to increase to overcome this temporary hurdle.
In the remodeling industry, the standard amount spent on a marketing budget may be quite different from other small businesses. Companies specializing in exterior work generally need budget percentages similar to those described in the previous paragraph. But remodeling professionals who have design/build or full-service remodeling firms do not provide a standard product or service like most businesses. They provide a high dollar, very specialized, and complex set of services delivered to clients with whom they have developed a high level of trust. Therefore, it is normal for remodelers to get a high percentage of their work through word-of-mouth referrals and repeat business.
The Business You’ve Established Impacts Your Marketing Strategy
Many remodelers based in small towns where opportunities are limited, and competition is absent, find word-of-mouth advertising sufficient. The same applies to remodelers who, by choice, keep their businesses small, doing all the field work themselves, working only for a close circle of friends, and completing a couple of jobs per year.
But for the remodeler who has a vision of taking their company to the next level, he or she must treat marketing as an integral part of their business expenditures. These remodelers expect to continue getting most of their work through referrals and repeat business, but they recognize that even referrals must be nurtured through strategic marketing communications. They also know that to shape and expand their business beyond current boundaries, their marketing reach must also expand.
Established remodeling professionals typically budget between 2-3% of their gross annual revenue dependent upon their company’s specific goals. For companies with under $1 million revenue, a larger percentage may be required during the growth period for a robust marketing program. But small is better than nothing. When helping certain companies get going, we have begun with marketing strategies for less than $10,000. On the other hand, a different client had, at one point, revenues around $500K and chose to invest $50,000 in marketing for the year. Growth was important to this company.
• While considering your marketing budget, you also need to take a look at the rest of your company. Marketing is used to fill your sales funnel. Do you have sales processes to filter out and take advantage of the leads you get? If you have more sales, do you have the necessary help, both in the office and in the field? It is crucial to determine whether your company can realistically cope with the extra business a well-executed marketing plan may bring.
• Another element to consider is who will be developing and executing your marketing plan? If you try to do it yourself, chances are that your marketing efforts will be inconsistent. All of the pressing daily demands of your business will force you to start putting it off. If you select a professional company, with a proven record, you are more likely to have a positive experience and see a return on your investment.
We’re Here to Maximize Your Budget with Adaptive Marketing
Here at RT Marketing our highly trained and experienced staff is eager to work with you to maximize your marketing spending. We will help develop a plan for your company to reach its goals through effective marketing. Then, during the execution of that plan, we constantly evaluate its effectiveness and, if needed, shift our tactics to meet your goals. Adaptive Marketing is one of our specialties!
As always, we would like to thank our friends and loyal amazing clients—past, present, and future! Contact us to learn more today.