Defining a marketing budget—like any other business initiative—is never comfortable. It is a matter of discipline but there are steps you can take to determine the right budget for your specific needs. You can also contact us to help with this or any other remodeling marketing strategies you may be contemplating.
This article gives you some areas to examine and get started defining a realistic marketing budget to accomplish your company goals.
Ask Yourself:
- Are you struggling to reach potential clients?
- Do you want to compete for specific kinds of projects more effectively?
- Are you hoping to increase your company’s visibility in a specific geographic area?
- Does your firm need to be more resilient in case of another economic downturn?
- Has your home remodeling business only grown because of you, the owner, and it needs to stand on its own now?
Marketing Budget Averages & Fluctuations
Generally, for small businesses that have been operating between one and five years, consultants recommend spending 12-20% of gross annual revenue on marketing. As a business becomes more established over time, and thus more profitable, its marketing budget shrinks to 6-12% of gross annual revenue.
Likewise, in times of flux, such as during a rebranding, or when a company is faced with an economic headwind, the budgeting expenditure will need to increase to overcome this temporary hurdle.
In the remodeling industry, the standard amount spent on a marketing budget may be quite different from other small businesses. Companies specializing in standardized work, whether they’re in the construction industry or not, will generally need budget percentages similar to those described above.
However, remodeling professionals with design/build or full-service remodeling firms do not have these standard products or services. They provide highly specialized and complex services delivered to clients with whom they have developed a high level of trust.
As a remodeler, you may get a large percentage of your work through word-of-mouth referrals and repeat business. This is not unusual but it also may not be enough to grow your business. That may require a more strategic marketing plan to accomplish, along with a budget to match.
Your Business Model Will Impact Your Marketing Strategy
Many remodelers based in small towns where opportunities are limited, and competition is light, find word-of-mouth advertising sufficient. Some remodelers also choose to keep their businesses small. They only want a few jobs per year, do all the fieldwork themselves, and primarily work only for a close circle of friends.
In contrast, business owners who have a vision of taking their remodeling business to the next level must treat marketing as an integral part of their business. Even if you hope to continue getting most of your leads through referrals and repeat business, you should know that even referrals must be nurtured through strategic marketing communications. Also, know that to shape and expand your business beyond current boundaries, your marketing reach must also expand.
Established remodeling professionals typically budget between 2-3% of their gross annual revenue dependent upon their company’s specific goals.
For companies with under $1 million revenue, a larger percentage may be required during the growth period for a strategic marketing program. But small is better than nothing.
When helping certain companies get going, we have started with initial marketing strategies under $10,000 for the year. On the other hand, we’ve had clients who were stuck on a revenue plateau, say around $500K, and they chose to invest 10% (or $50,000) in their marketing the first year. If growth is important to your company, this may be the way to get over that stagnate sales level quickly.
- While considering your marketing budget, also take a look at the way you do business as a whole. Marketing is used to fill your sales funnel but do you have sales processes to filter out the qualified projects and take advantage of the leads you get?
As sales increase, do you have the necessary help, both in the office and in the field to handle it? It is crucial to determine whether your company can realistically cope with the extra business a well-executed marketing plan can bring.
- Another element to consider is who will be developing and executing your marketing plan? If you try to do it yourself, chances are that your marketing efforts will be inconsistent and lacking in some areas such as content marketing or social media marketing. All of the pressing daily demands of your business will force you to start putting it off.
Start With a Strategic Plan and a Reasonable Budget
Remodelers, like every other business, hear that they need to be everywhere all the time to compete. This would be great but it is not a realistic goal for most. Instead, define a few specific areas to focus your efforts on and create a marketing budget that will accomplish that plan.
Often, content writing and other efforts can be used for multiple purposes. You should get as much exposure from each element as you can. This is an area where a professional marketing team can really be a benefit. Through their experience, they can help determine the right balance between extra exposure and redundancy.
Maximize Your Budget with a Professional Marketing Team
The team at RT Marketing can offer you experience and an informed perspective. We will work with you to develop a marketing plan and budget for your remodeling company, then help you get the most from it. We also monitor the effectiveness of your program and, if needed, adjust tactics to continually meet or exceed the set goals within your budget. We call it adaptive marketing and it is one of our specialties.
If you are considering a new marketing plan and unsure how to budget for it, contact us. We will be happy to discuss it with you under no obligation.