You should also expect to spend at least $5,500 on marketing programs in your first year in business. Some homebased business owners undercapitalize marketing because they don't see themselves as "running a business." Do you fit this description? If so, you've adopted a dangerous mindset. Without some form of marketing, sooner or later you'll find yourself out of a "job." You see, nothing in the business world remains static for long. You may have a contract from a major company today, but your contract can dry up, that business may be acquired by an even larger one or your contact there may change, leaving you, an independent contractor, scrambling for more work.
Your actual budget will depend on:
- The size and location of your market. If you plan to sell a consumer product nationwide, for example, your marketing costs will be dramatically higher than if you market a business service in your hometown.
- The type of marketing tactics required. Some marketing tactics require a larger budget than others. For instance, it will cost more to mount a TV campaign to market a consumer product than it will to send four-color sell sheets to business-to-business prospects.
- How difficult your prospects are to reach. Some target audiences will require greater resources and efforts to penetrate. For example, you can expect to pay more for a direct mail list of information services managers at technology companies (which is more difficult to create and update) than for a list of all residents in a particular zip code.
- The sales tools you'll need to compete. No matter what kind of business you're in, your tools must be of the highest quality. But the types of tools your business requires will dictate the budget that must be allocated. For instance, a contractor meeting with homeowners might require a four-panel color brochure, pre-printed estimate sheets, and an attractive photo album with examples of completed jobs, while a high-technology marketer will need expensive equipment to make the sale, including a laptop computer, LCD projector with screen and presentation software.
- The level of competition in your market niche. It costs more to mount a campaign to effectively break through competitive clutter than it does to communicate with your target audience in an environment relatively free of competing messages. If your market niche is filled with well-established and entrenched competitors, you'll have to employ a wider range of marketing tactics and fight hard for positioning and top-of-mind awareness.