Developing a Marketing Budget Your Budget is a Marketing Tactic There are several benefits of creating and using a marketing budget: The goal of your marketing budget is to control your expenses and project your revenues. It also assists in the coordination of your marketing activities within your organization. A realistic budget establishes a standard of performance for your actions, and communicates those standards to others responsible for implementing your marketing strategy. A well-designed budget is also a tool to keep you on target and indicate when there is needed modification of your marketing plan — especially if something goes really right or very wrong. A Simple Expense Budget The math of the expense budget is very simple. The content takes work, but not the design of the table. It's built on common sense and reasonable guesses, without statistical analysis, mathematical techniques, or any past data. The mathematics are also simple, sums of the rows and columns. In the example below, rows are horizontal, columns are vertical. Each line of expense occupies a row, and months and years occupy columns. The source spreadsheet hides the monthly columns for March through October for the purpose of illustration, so you can see the annual total without scrolling. Those other months are there, even if they don't show. The total expense row sums the individual expense rows. The annual expense column sums the months for each row, including the total rows. Sample from Marketing Plan Pro. As you develop a budget, think of it as educated guessing. Consider your plan objectives, your sales and marketing activities, and how you'll relate your spending to your strategy. Remember as you budget that you want to prioritize your spending to match your priorities in sales and target marketing. The emphasis in your strategy should show up in your actual detailed programs. Budgeting Approaches There are several approaches you can take to create your budget. Example of these approaches may include basing your budget based on: Percent of projected gross sales Percent of past gross sales Per unit sales Seasonal allocation Projected cash flow Select a budget methodology that will work best for your business. You may want to make this choice based on how you track your sales and revenues, or based on industry standards. Keep the Process in Perspective Keep the budget process in perspective. You are making a series of educated guesses. If it makes you feel better, remind your audience how you came up with your projections in your marketing plan. For this same reason, it is important to review your budget throughout the year and make adjustments when necessary. Reviewing your marketing plan throughout the plan period will be addressed in greater detail when you complete the “controls” section of your marketing plan. One of the best ways to create your budget may be to build your projections on the previous year’s performance. If you have this information, the foundation is in place. Look at trends and expectations in each area and modify these numbers based on your expectations for the upcoming year. Look at industry performance and trends and take those factors into consideration. Once you get to the bottom line, ask yourself if it is realistic, or if you need to go back and modify revenues or expenses to more closely capture what you expect to happen in the year ahead. When You Don't Have Past Data to Compare If you do not have historical data available, the process is more challenging, but still doable. Your reliance on industry information is going to be greater and it will require more research to formulate your projections. Take advantage of the tremendous amount of marketing information through resources that may be available at no cost. In most all cases, each industry will have a trade association, a website, and at least one publication in existence. You may also be able to leverage information from other industries that might provide you additional insight. For example, a restaurant may want to know more about new home construction projections in their immediate area as they attempt to predict next year’s growth. Creativity is a Budget's Best Friend You may also want to consider some non-traditional ways of maximizing your budget dollars and including those into your budget projections. A large percentage of advertising on the radio is on a barter basis. Manufactures may offer co-op dollars for advertising efforts. Magazines may extend your payment schedule to allow you to generate sales from the ad before you pay the balance. .