Proper budgeting is crucial to the success of a startup, you don’t want to find out you are bled dry after a successful quarter, or you don’t want to end up with an irregular balance sheet every month. For startups, getting the word out is a priority, so spending on branding should always be budgeted. Luckily, there are a host of startup budget templates out there to use as a general guide for planning your finances. When it comes to planning what goes into your marketing budget, here are three important questions you can ask.
How much can I afford to spend?
Creating a startup budget doesn’t have to be a daunting or complicated task. Budgeting simply allows you to estimate how much it will cost to run your startup. The first step is knowing your essential costs, overhead and variable costs and understanding how much you can afford to spend.
First, it’s vital to figure out your monthly spend. This can be done using a notebook and manually tallying up your expenses, or business accounting software can be used. A simple spreadsheet like Google Sheets or Excel will suffice.
Set a target budget upfront when you tally up must-have and nice-to-have purchases. Budgeting startups typically start with expenses as they’re easier to predict.
Next, list your essential startup costs. These are priority expenses that are vital to keeping your business running. This includes:
- Startup assets: one-time purchases like furniture, computers, vehicles, security deposits (these are not tax-deductible).
- Startup expenses: fixed or variable expenses like rent and payroll (these are tax-deductible).
Determine your fixed costs (also known as overhead costs). Budgeting startups can include things such as payroll and benefits, business insurance, web hosting, bank fees, rent or mortgage, business insurance, internet and phone, and other professional services.
Determine your variable costs (these typically don’t have a set monthly cost). Budgeting startups can include things such as advertising spend, equipment, utilities, freelance services, travel and events, transport, raw materials, shipping costs, and business income taxes.
Calculate your monthly revenue. Planning your startup budget will require a couple of forecasts because no past sales data exists for your business. You’ll have an optimistic projection and a conservative one. Consider factors like repeat customers, potential market share, and the current conditions of the market are like. Keep it realistic and list out both your revenue and funding sources such as loans, savings, investment income, product or service sales, and business or corporate credit card.
Tally up your total costs, review, and adjust. If your goal sounds better on paper, you can adjust before borrowing more capital. Label your expenses as necessary or discretionary.
2. PR, advertising or marketing?
These three are actually very different, and the cost varies between them. Determine your objectives and how much you can afford. Your choice should be a balance between those two answers.
Marketing – Marketing is the overall process of boosting consumer awareness of a product, person or service. For example, advertising and public relations are two methods that fall under the ‘marketing’ umbrella term. Some marketing activities include: conduct interviews and market research, create website content, organise conferences or exhibitions, commission advertising and create new marketing concepts for products.
PR – Public relations deals with maintaining a good company reputation in the media. Startups can opt for specialist PR consultancies since they are experienced and have a better bandwidth for communicating with the media. The overall goal of PR is to get positive press coverage. PR practitioners write press releases, contact media and inform them of news regarding their business, speak at public forums, write in-house magazines and newsletters, and keep records of whenever their company is mentioned in the press. To some, PR is considered more economical than advertising as it focuses on organic voices. However, it is important to note that they are not the same. Decide what is the best way to reach your objectives so that you do not end up wasting valuable resources.
Advertising – is persuading a target audience to buy a product. Usually, if the startup budget allows for it, businesses can creative and develop concepts, words, and artwork for adverts. Typically, when a marketing team sees a need for advertising in the campaign, it’ll turn to an advertising agency.
Read also: How to pick the best PR firm for your startup.
3. Am I spending more than I should?
As with any business expense, you should be clear on whether you are getting sufficient returns. Return on investment tells you how much you get back from putting this amount in, whether it is a target number of coverage, sales (traditionally) or other KPIs.
There is a combination of quantitative and qualitative measurements that can determine how effective your PR efforts are. First, you need to pick the right key performance indicators (KPIs). Essentially, what do you want to achieve and identifying strategies to help you reach those objectives?
KPI metrics include:
- Domain authority (higher ranking web pages)
- Sentiment (qualitative measurement of opinions people have about your business that translates to brand perception)
- Lead generation and earned traffic (tracking the number of website visitors, how well your social media performs, or the motivation behind customers completing call-to-actions)
- Share of voice (or SOV, refers to the percentage of your coverage compared to your competitors – your brand’s visibility within its target market)
- Penetration of key messages (top benefits of your product or solution being repeated for consistent brand perception – does the coverage reflect your company’s key messaging?)
- Engagement with influencers (having a direct line from influencers to your target market that promotes positive, on-message coverage for your business)
Don’t ignore the more qualitative aspects of returns
It can be tricky calculating the ROI for more qualitative aspects, especially those on social media. Although seemingly elusive, social media can give key insights to improve customer service, reputation management, and crisis communications. Getting first-hand responses from customers regarding how they use your product and the commentary around your branding efforts provides invaluable information that directly impacts business decisions in the future.
ROI is an important metric for knowing what is working, knowing what to budget, knowing when to invest your resources elsewhere.
It takes more than an idea and a good marketing strategy to succeed in today’s business environment.
Your company needs a strong brand that consumers immediately recognise and trust. Great branding can propel your business to success; poor or nonexistent branding can leave you languishing in the back of the pack.
At first glance, it might look like branding is an expense with no return, something you could do without if you had to. And yet great brands are born and sustained because they bring so much more to the table than mere recognition or social status — they gain customers’ loyalty over their competition. Being able to match your expenses with your revenue means cutting costs where it won’t hurt your long-term goals – and this includes branding.
Want to know more about how to make the most out of your startup budget for PR and content marketing? Get in touch with us at firstname.lastname@example.org