Marketing Budget Planning- to cut or not to cut?


For businesses working on a calendar fiscal year, the stress of the holiday season is nothing compared to the stress of planning budgets for the following year!   No department wants to suffer cuts and all business owners need to make some very difficult decisions every year to forecast what will make the next year more successful than the current year.

The challenge becomes ‘to cut or not to cut?’ and unfortunately, the first place that is affected is the last place that should be. Marketing and advertising budgets are generally a target when it comes to determining where expenses can be trimmed, since much of the ROI is based on intangibles like name recognition and branding.

One of my favorite quotes is, “The man who stops advertising to save money is like the man who stops the clock to save time.” It has been credited to a few wise men throughout history but the bottom line is that if a business expects to grow, the worst place to cut is the means in which you need to attract the new potential customers who are essential to that growth!

During the last recession, businesses that regained their financial position and market share the quickest were those who continued to market and advertise in spite of the unstable economic conditions. Granted, they needed to cut the fat out of their budgets and be more deliberate in their strategy, but they knew that in order to be present when the customers were ready to buy again, they needed to keep out there on top of their minds.

I had this discussion with a business owner once who every year planned their marketing budget to be slightly less or at par with the previous year’s sales. But yet, they projected to have a minimum increase of sales for their staff of 10-20%. My thoughts were, ‘how can you expect to get the attention of more people to come to your business while spending less?’ Why not use the philosophy of spending slightly more, but do it more strategically to gain more traffic and market share?   Sadly, determining the risk was too great, the budget continued to decrease and of course the sales didn’t increase.

Although it is tempting to save money in the short run, if your business is no longer on top of the consumer’s mind you are really eliminating any potential future business when they are ready to make a buying decision.   If you depend on driving more customers to buy your products or services, be prudent when determining what investment is needed to ensure you are able to reach them. Make sure your advertising and marketing strategies are working hard for your business and are efficiently budgeted to drive the most positive results.


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