You’ve got step one of launching your startup—creating an innovative product that people will line up to buy—down. But what about the equally important step two, spreading the word? Even if your startup is offering the most exciting new product in the world, you’re not truly in business unless you have customers, and for that, you need a comprehensive marketing plan. You don’t want your startup to be the proverbial tree falling in the forest with no one around to hear.
“To drive sales, you need good marketing, but you can’t afford the marketing until you’ve made some sales.”
There’s just one problem. Typically, with a startup, you’re faced with the challenge of putting the word out without having a large budget to work with. It’s a chicken/egg dilemma—to drive sales, you need good marketing, but you can’t afford the marketing until you’ve made some sales.
That’s why budgeting is so important in the initial stages of marketing a growing business. Chances are, you have very little cash to work with in the beginning, so you’ll need to make ends meet on a shoestring budget. Here’s how to make the most of your limited funds.
Know How Much Can You Afford
The first step in devising a marketing budget for your startup is figuring out how much your company can realistically afford to invest. To arrive at a number, first you’ve got to go back and examine your revenues, then calculate how much of that income is disposable.
Calculate your marketing spending using the “percentage of sales” method, suggests Jeffrey Joyner of Demand Media in “What Is the Average Marketing and Advertising Budget for a Company?”
“The most commonly used method is to base your marketing budget on a percentage of your sales,” Joyner explains. “You may use sales units, past sales or projections for future sales as the basis for your calculation. The advantage of using sales as your basis is that if you experience a slow quarter, your marketing budget will automatically decline.”
Many startup founders will choose a cutoff point—say, 5% of their sales revenues, or maybe 7%—and stick to that number religiously. With this approach, you know you’re investing a portion of your revenue that’s reasonable and sustainable.
Do the Legwork to Calculate ROI
After arriving at your initial plan for a marketing budget, you may decide later to go back and make changes. Renee Warren, co-founder of technology startup Onboardly, notes in “The Ultimate Guide to Startup Marketing” that often, unexpected fluctuations in your marketing ROI will prompt you to reconsider your strategy.
“At the end of the day, it all comes down to the money,” Warren states. “How much can you afford to spend on your startup marketing strategy? Remember that while inbound marketing leads cost 61% less than outbound marketing leads, they are not free. Set a budget early in the game and accept that limitation.”
Warren elaborates that often, marketing managers make fairly arbitrary decisions about their budgetary plan without doing any kind of ROI analysis. This is dangerous—without tracking the results of your marketing strategies, how will you know whether or not they’re working? Calculate your ROI and make sure your marketing initiatives are making money.
Get Your Marketing Started for Free
If your startup is still in the very early stages, you might have an extremely small budget for marketing…or perhaps even no money at all. In this situation, it helps to have a good handle on strategies and tools available to you for free.
One such tactic is to network with influential people in your industry. In “The Ultimate Guide to Marketing Your Startup Online Without a Big Budget,” KickOffLabs founder and CEO Josh Ledgard points out that this doesn’t necessarily require money. Instead, what you need are time, effort, and solid people skills.
“If you find yourself in a position where your network is lacking, get out there and start being active with influential people,” Ledgard recommends. “Follow them on their social networks, comment on their posts, share their content with your friends, engage with them and make them notice you.”
You can do this mostly by social media, and you can do it without spending a dime. Start small on sites like LinkedIn and Twitter where like-minded professionals tend to congregate. Use these platforms to build your network of industry contacts—it will help you down the road as you’re working to bolster your startup’s brand.
Decide What’s Worth Paying For
As your company starts to grow, you’ll eventually find the funds to begin investing in bigger marketing initiatives. A key part of your plan should be to research exactly which marketing channels are worth it for your startup.
“Exactly what marketing channels are worth paying money for?”
In “5 Smart Ways for Startups to Spend Marketing Money,” AdvisorTV CEO Adam Fridman says you might eventually decide it’s worth shelling out the cash for paid social media promotions rather than simply making free posts.
“I know, social media is supposed to be free,” Fridman conceded. “And it is. But boosting a post on Facebook—they call it boosting and usually offer it after each status update—or promoting a tweet can greatly increase your reach and bring new customers and followers. And you can do it for just a few hundred dollars a month.”
Along the same lines, you can bolster your content marketing efforts with promoted search engine rankings. This should lead to more clicks, more readers and perhaps, eventually, more paying customers.
What You Can Do Right Now
If you’re trying to market your fledgling startup on a limited budget, don’t worry. It’s been done effectively before, and you can do it too. Here’s how.
- Begin by figuring out how much you can afford to invest in marketing your business. Link your marketing budget to your sales—5% to 7% of your revenue.
- Follow up by calculating your ROI and making sure your expenditures are paying off. If they’re not, don’t be afraid to mix things up.
- If you don’t have the cash for any big marketing plans, look for ways to put your name out there for free. Networking via social media is a good example.
- Finally, as you begin to branch out, look for strategic ways to invest in paid social posts or boosted search engine rankings.
Latest posts by Murray Goldstein
- What Retailers Need to Know About the Journey of Today’s Shoppers - April 30, 2019
- Business Continuity Plan and the 9 Critical Functions of A Strong Plan - September 20, 2017
- 6 Questions to Ask When Selecting a Technology Partner for Your Business - June 13, 2017