How to you estimate what your marketing budget should be?
The marketing and advertising budget must be a pre-determined percentage of anticipated revenues. It must include every dollar you plan to invest in marketing the business. It has to include provision for advertising, merchandising, promotion, and public relations. It must also allow for special opportunities that may present themselves during the year.
With a prepared marketing plan, you are well equipped to prioritize the activities and their related costs to assist you in establishing a budget. Common methods for determining the marketing budget include:
Percentage of Historical Sales
Many pubs and restaurants spend between 2-4% of total revenues on advertising, marketing and promotion. For a pub with revenues of $1,500,000 you may therefore have a budget of between $30,000 and $60,000.
Percentage of Predicted Sales
This is a very positive way of viewing your budget. The easiest way to make a prediction is to look at historical sales and estimate by what percentage you can increase those sales in the coming year if certain events take place.
Setting an arbitrary dollar figure is the least satisfactory method. You will not get the desired result and you will have wasted most of whatever amount of money you arbitrarily chose.