Allocating a specified percentage of sales revenue is one of the most popular methods for developing a marketing budget. The average allocation usually ranges between 9 and 12% of the annual budget, while smaller businesses may go as low as 2%.
As a general guideline, you should be spending around 5% of total revenue on marketing in order to maintain your current position. If you’re looking to grow your business or increase your market share, it stands to reason, that you should increase your percentage spend to at least 10% of total revenue.
Set up your visual communication plan first and then work out your budget according to that plan. Your visual communication plan is your roadmap that outlines your marketing strategy, costs and projected results over a specified period of time. Spending time allocating budget to your visual communication plan and strategy affords you a great opportunity to get creative in terms of getting the most value for your money ie working on preparing a basic media selection plan which will be dictated by your specific visual communication plan. Your visual communications budget forms an integral aspect of your overall visual communications plan – a crucial part of the marketing process.
Budgeting can be difficult particularly when your funds are limited. Be advised that to estimate or base your budget requirements on what you spent the previous year, doesn’t work. You should be revising your visual communication plan and budget every six months to see where your efforts are paying off. Developing a budget that is solid plays a great part in creating a plan of action that is realistic and will ultimately increase revenues.