Winston Churchill said, “Plans are of little importance, but planning is essential.” Wise words. As most Financial Planners will tell you, most people plan more for their vacation than for their retirement. The same is true with businesses. It’s hard enough to find a small business with a business plan let alone a marketing plan. A good marketing plan can generate needed momentum to grow business. It also provides the opportunity to assess the past and forecast the future.
One aspect of this planning is to determine a budget. That process begins by looking at the last 3-5 years of revenue. This will form a solid base from which to forecast. This time frame will allow for variables, such as the worst winter in recorded history, which might affect the numbers. The forecast will begin to take its own form as other factors such as seasonality and other variables are taken into consideration.
Once the revenue forecast is arrived at, the next step is to apply a percentage to the forecast number to determine the amount to be dedicated to marketing. As an example, most furniture trade organizations suggest 6% of forecasted revenue. This is how the budget is set. The budget can now be broken down to specific types of marketing and advertising.
By arriving at a budget, buying power is created that can be used to obtain preferred rates with suppliers in exchange for monetary commitments. A budget is a guide. It may be adjusted as time unfolds, but having the plan and making minor changes is better than no plan at all. Just ask Winston.