We talk to dozens of startups every month about their marketing needs, and one of the first questions we ask is “What is your marketing budget?”
Most of the time, the answer that we get back is a blank stare accompanied by a shrug.
If this is you, don’t feel bad. You certainly aren’t the only one.
You’re busy doing things like:
- Creating content
- Building ad campaigns
- Aligning your messaging with sales
- Building key relationships
- Refining your persona’s
- Iterating the website
- Being an all-around amazing marketer
So it’s understandable that you haven’t quite gotten around to building a marketing budget. But when you need to make large marketing investments (like building a website) and when investors need to understand marketing spend, you’ll want to have a budget.
So, how do you start?
In this post we’re going to detail:
- Why you need a marketing budget
- How you can align your budget with your business goals
- Ways you can build a budget
- How to keep your budget on track
Build Your Marketing Budget Quickly with This Template
Don’t spend time reinventing the wheel when we already have a proven marketing budget used by B2B startups. This template pack includes two marketing budgets that you can use to track your marketing budget, actual expenses, and variance.
Why do you need a marketing budget
Growing marketing teams are often working on multiple growth initiatives at any given time.
You’re likely have teams that are working on paid acquisition, social media, PR, content marketing, video, and site development, and each of these initiatives will have different budgetary needs.
By creating budgets for each one of these needs you ensure that:
- Teams prove they are creating growth: B2B marketing comes down to finding the best ways to drive the most leads for the least amount of money. If you aren’t tracking your marketing initiatives separately and properly, you will lack insight into what is really working and what can be discontinued. A budget helps marketing teams understand the total amount spent on a given marketing initiative.
- Teams provide reasoning for the budget: Every startup needs to understand and plan for their “burn rate”. This means that your finance team is going to be looking at marketing to identify and justify its investment. Having an outline of your needs will help ensure your entire company (and investors) understand where the money is going.
- Teams are using the budget: If teams don’t have a need for the budget and can’t justify funds being allocated toward them, the funds can be used somewhere else to help the company meet its goals.
Building the budget
There are a few common ways that companies decide on what the overall marketing budget.
- Goal-Based Budgeting: Goal-based budgeting is a great option for companies with historical growth data and specific goals. If you know how much it will cost you as a company to obtain a customer, and you also know your growth goal, then you can back into your specific growth goal. For instance, if you know it costs your $100 for a lead, and you need 100 leads to make your 25 sale goal, then you need to budget for $10,000 ($100×100). If possible, this is ideal for startups.
- Percentage of Sales Based Budgeting: For companies that don’t have as much historical data to understand how marketing spend will affect growth, you can use the percentage of sales method. This budgeting method simply takes a percentage of the company’s total revenue and allocates it to marketing.
- Top-down budgeting: Many startups, especially early-stage startups, end up using the top down budgeting for the sake of simplicity. This method simply has an executive, usually, the CEO or CFO, decide what the company can afford to spend each month or quarter.
All of these methods can be effective in certain situations, however, high growth startups are likely going to want to budget based on their expected scale. If you can, goal-based budgeting.
How do you ensure your budget aligns with your company’s needs?
As a startup, you likely have limited funds to allocate to marketing or any other department at your company. So you need to prioritize what initiatives in your department get funding and how much.
To help you decide what initiatives get funding, you need to first think about your goals as a marketing organization, and as a company. You should take into account your company’s goals for growth, product development, and market development.
Once you have an understanding of these goals, prioritize the projects that most help you achieve these goals.
Use your marketing team’s performance marketing analytics to analyze each one of your initiatives to understand at a high level what is driving results.
Stay on track
A budget doesn’t do you much good if you don’t stay on track and keep up with it. That’s why we’ve built an easy to use marketing budget template to help you track your budget. Even with that budget, there are a few things you can do to make sure you’re on track.
Make accurate estimates
The best way to stay on track is to make sure your project estimates are accurate from the beginning. It will be difficult to achieve 100% accuracy, but there are two ways that you can create estimates that will help.
- Use last years actual costs to estimate what this year’s costs will be. If you’re doing a project that is nearly identical to what you have done previously, then this can be effective
- Have your team leaders or project managers break each project down into steps or sections. Estimate how much each one of those steps will cost and use those numbers to build a project budget.
Watch out for hidden costs
One of the biggest reasons for budget inaccuracies is hidden costs. Small things like service fees, additional redesigns, and assets, legal costs, and taxes.
To ensure nothing creeps up on you, make sure you work with your project teams and any agencies to ensure you have as accurate of an estimate as possible that includes any fringe costs. Once you have this accurate estimate, give yourself a small cushion in your budget just in case things go awry.
Track your spend
Once you have an idea of how much you’ll be spending on each initiative, you need to hold yourself and your team accountable for hitting their numbers.
You can use a marketing budget in something as simple as Excel to track all of your expenses. At the end of every week when you follow up with your teams on their projects, ask them about their marketing spend.
Then just update your document with your numbers. The HUSL Marketing Budget Template has an automatic variance calculator.
Using Your Budget
First, make sure you download your budget templates here.
Got it? Alright!
You’ll see that each template is broken down into monthly, quarterly, and yearly spend. In the vertical monthly column, you can see your project totals, along with your budget vs. actual project variance.
At the end of every quarterly period, you’ll see the quarterly budget, actual, and variance totals.
You can see your spend totals across all categories at the bottom of your template.
Your yearly totals will be in the very last column on the right.
Things to remember
- Columns marked in bold are hard-coded with a formula, so don’t enter data over them!
- You can add and remove any rows that you want. Simply right-click and add/delete rows as you need!
- Don’t forget the graphs at the end of the template! Use these to get a quick visual display of your budget.
There it is! Now you have all you need to create and document your marketing budget.