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How to reach out to Garrett Mehrguth: Setting a Marketing Budget When setting a marketing budget for your business, it’s important to make sure you use every penny wisely. This means not stretching your company too thin and not assuming your level of income. This may seem like a simple rule, but for many businesses, it’s difficult to execute correctly. That’s why we sat down with Garret Mehrguth of Directive Consulting. In this episode, Garrett explains how to set a marketing budget that gives you the most bang for your buck, as well as the tips he wishes he knew when starting out in marketing. So if you’re looking to outline a marketing budget that can help you reach your business goals, don’t stop scrolling. The Importance of Setting a Marketing Budget Every business owner knows they should set a marketing budget, but do you truly know why it’s important for your future success? The data you use to determine your budget plays a HUGE role in your ability to scale effectively. In fact, if you choose to base your budget on assumptions of what you’ll be making, rather than on your historical revenue, you’ll be much more likely to eventually run out of cash. Think of it this way: your marketing efforts should be bringing in money, NOT sucking your business dry. When you bank on future sales that may or may not come to fruition, you decrease your chances of achieving the revenue and growth goals you’ve set. This is because future sales are unpredictable. The market is always changing, and it’s impossible to plan for every potentiality. However, when you base your projected earnings, and therefore, your marketing budget, on the revenue you KNOW your business can generate, you maximize your ability to scale your company effectively. If that still seems complicated, follow this simple rule. Your marketing budget should be equivalent to 10 percent of the revenue you expect to generate in that same period of time. So if you’re planning your budget for an entire year, it should be equal to 10% of what you can solidly project you’ll generate in revenue that year. Make sense? Here’s why. What Garrett Wishes He Knew BEFORE He Started Marketing When you’re a business owner, you can grow and want to grow, but if you do it too fast, you won’t be able to sustain it. If you can’t sustain the amount of velocity you’re striving toward, then it’s time to tone down your spending. It may sound counterintuitive to grow by spending less, but in truth, it’s all about strategy. People often have an idea that once something “works”, they’ll increase its volume and spend anything. This isn’t the best approach to growth. In fact, the best approach is to actually raise rates while keeping your volume the same. Doing this enables you to bring in revenue without growing too fast. Once you’ve grown your revenue intake to a level that allows you to invest more in your company infrastructure, you can begin to slowly increase the volume of your marketing efforts. Before you do, though ask yourself the following questions: What’s your average contract value? Do you have the ability to service new customers with the same level of care that you have been with current customers? Do you have the capital necessary to service your company infrastructure? How does your desired marketing budget compare to your historical revenue? Have you evaluated your historical revenue to determine what your marketing budget should be? Once your answers to those questions are positive, you will be in a good place to begin increasing the velocity of your marketing efforts, rather than just your rates. Don’t Make This Mistake When deciding on your marketing budget, be sure to avoid making the mistake of blind ambition. This ties into the questions above, as no matter how good of a company you are, you simply cannot increase sales velocity without decreasing quality. This means you must grow in ways that are sustainable and not r...