How to budget for a new market launch
The importance of marketing
No-one likes to think about the cost of anything (!) but one of the reasons we don’t do this as a small business is that we are often only just making ends meet, let alone looking at more expenditure on the strength of ‘jam tomorrow’.
But that’s what marketing has to be about – we have to prepare for tomorrow, next year and hopefully five years time. If you’re not thinking like that, you will always be a small business. The importance of marketing is that it allows you to grow.
In marketing terms it’s natural to start looking at new markets or new places to sell your products so why not internationalise?
Marketing budget for a product launch
Once you’ve been through a lot of our action planning process, you need to think about the launch – specifically, how much to expect from the first year and how much to spend on the launch.
A very good way to look at your marketing spend on a launch should cover the need to cascade your business objectives:
Taking the NL Market objective as a starting point it would be sensible to look at how much will be gained over the next three years rather than think about the amount of expenditure you’ll be expending.
How to budget using a ‘ball park budget’
The following chart explains how as a small business you can look at the objective and develop a ‘ball park’ budget to help you achieve your goals.
Let’s say, for example, you have £15,000 as your budget. Using this plan you will be able to see where you’re spending your money and to a certain extent your resources, albeit human.
This money should be split into three years to help you see how your plan works. Ideally we would suggest a Gantt chart that lists out the actions and timings over the three year period. I recommend checking out the Gantt website for more information if you are not familiar with it.
Obviously, the bulk of the project costs are front-ended which might mean your expenditure will not be £15,000 divided by three (£5,000 per year). But, bearing in mind your product may be different, it should look something like this:
Year 1 – £7,500 to cover the research and launch costs
Year 2 – £4,500 to back the literature, training and market visits
Year 3 – £3,000 for normal market support
This gives you a feel for how you might set your budget – remember, £15,000 might sound like a lot of money, but it may end up netting you sales of three, four or five (or even more!) times that amount.
This example works well for B2B, and when working through an agent or distributor, however it should be increased if dealing with B2C, as this is much more expensive.