You will be able to set a monthly marketing budget in time and money and keep part of it aside for tests.
A common way to run marketing in a small business is to spend whatever is left in the account once the month's bills are paid. In a good month that might be a few hundred dollars, and in a slow month it can be zero. You can't plan a campaign around a figure that changes that much, and you can't explain it to a partner, a bank or yourself. The owner's own time usually goes uncounted as well, although for most small businesses it is the biggest cost in the whole effort.
A workable budget does four things. It sets a clear total for each month, counts your hours next to the money, breaks the money into separate lines, and holds back a small fixed sum for tests. Allow about thirty minutes to fill one in. You'll need the budget sheet template placed below, the goal and channel numbers you worked out in lesson 6.1, and your lifetime value and maximum acquisition cost from lesson 6.3.
Each of the common methods answers a different question.
With share of revenue, marketing gets a fixed slice of what comes into the business, such as a set percentage of last year's monthly revenue. It is simple to explain, and it keeps spending within what the business can carry. Its drawback is that it is based on the past, so it tells you nothing about what this year's goal requires.
The task method begins with the goal. Take your numbers from lesson 6.1, list the work your two channels need each month to reach them, and put a cost against each task. This is slower, but the budget you end up with matches your plan.
The affordable-loss method asks how much you could spend while you learn and not mind losing if nothing came back. It fits a new business, or a new channel, where you have no evidence yet about what works.
Choose one as your main method and run a second as a check, then compare the two figures. Suppose the task method comes to S$1,500 a month and share of revenue comes to S$400 a month. A difference that large points to one of two problems: the goal may be bigger than the business can support at the moment, or the plan costs too much.
No money leaves your account when you spend an evening writing captions, but the time still costs you. That hour came out of paid work, such as a class you could have taught, a batch you could have baked or a sale you could have made. Price each marketing hour at what you earn per hour from paid work, or at what it would cost to pay someone else to do the same job.
At 10 hours a month and S$40 an hour (example figures), you are spending S$400 a month in time before any money goes out. Counting hours this way often shows that a channel you thought was free is the most expensive item in the plan. For every channel on the sheet, record the hours per month and the value you've put on them.
Give the money at least three lines. Tools are things like a scheduling app, an email platform or a website plan. Design and production covers photos, video, printing and any freelancer you hire. Ad spend is what you pay directly to the platform. Once the money is split, you can see where each dollar goes, and problems are easier to spot. Watch for two patterns: tools that cost more than the ads they are meant to support, and design taking the entire budget so there is nothing left to put that design in front of people.
Set aside a test budget, a small fixed amount each month for trying something new. It can go on a different message, a new audience, or one of the channels on your "Not now" list from lesson 5.4. Pick a sum you could lose without any harm to the main plan.
Each test needs a stop rule, written down before the test begins. The rule states what you are testing, how much time or money it gets, and what result counts as failure. A referral offer to current parents, for instance, might run for four weeks and end if fewer than three families take it up. Writing the rule in advance guards against the mistake owners make most often with tests: letting one that isn't working carry on quietly because money has already been spent on it.
Priya runs a tuition centre (all figures in this example are invented). Priya uses the task method as the main method for the sheet and checks it against share of revenue, which comes out at a similar total. Priya's time is valued at S$50 an hour, and the two channels chosen are Google Business Profile and a monthly WhatsApp update.
Keeping the Google Business Profile up to date takes 4 hours a month, worth S$200 in time, with S$0 spent on tools. This quarter Priya is also paying S$150 once for new photos, and spread over the quarter that is S$50 a month. The WhatsApp update takes 3 hours a month, worth S$150 in time, and costs no money. A design app and a simple form builder together cost S$30 a month.
The test budget is S$200 a month. Test 1 is a search ad for "P5 maths tuition" plus the local area, running four weeks at S$50 a week, and it stops if it brings in fewer than four enquiries. Test 2, planned for next month, is a referral offer to current parents.
The money side comes to about S$280 a month including the test: S$30 for tools, S$200 for the test and S$50 for photos. The time side is S$350, which is 7 hours at S$50. Combined, Priya's marketing costs roughly S$630 a month, or about S$1,890 over a three-month term. With a goal of 20 new students, the planned cost is about S$95 per student (S$1,890 divided by 20 gives S$94.50). The maximum acquisition cost Priya set in lesson 6.3 is S$300.
With the sheet complete, check it against two questions. Does the total, hours included, fit what the business can carry without strain? Does the planned cost per customer come in below your maximum from lesson 6.3? A no to either means you change the goal, the channels or the spend now, while the plan exists only in a spreadsheet.
Priya can answer yes to both. Because about S$95 per student is well under the S$300 maximum, there is also room to spend more if enquiries arrive more slowly than planned, before the numbers stop working.
Now open the budget sheet and fill it in channel by channel. Write the hours first, before the money, because the hours are the line people most often leave out.
Fill in the budget sheet: monthly hours and dollars for each channel, a test budget, and a stop rule for each test.
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