Marketing serves as a gateway to growth. If executed successfully, a single ongoing marketing campaign can help a startup or small business find its initial audience, generate revenue and build a brand reputation that sets the stage for future expansion. Unfortunately, few businesses succeed in this way, as marketing strategies are rarely implemented successfully by new or emerging businesses.
There are several reasons for this.
The first is that startups generally have a lack of available resources and cannot effectively execute or oversee the campaigns responsibly. The second is that most new businesses are run by entrepreneurs who lack experience and therefore make inexperienced decisions. But perhaps most importantly, startups tend to make critical mistakes in their marketing budgeting, which are hard—if not impossible—to recover from.
These five mistakes are some of the most common ways new businesses fail in their marketing budgets.
1. They Invest Narrowly
When you’re shopping for a new car, you evaluate a lot of different candidates, but eventually you settle on one model that’s right for you. When you’re shopping for a marketing strategy, this method can cripple your chances for success, yet many startup entrepreneurs still do it.
They start researching various marketing options, which is a good first step, but they land on one, maybe two strategies that they feel will best support their business’ growth, and they refuse to look beyond those investments.
This is the marketing equivalent of putting all your eggs in one basket. Instead, it’s far better to hedge your bets with multiple strategies on multiple platforms, even if that means spreading your budget thinner. After a few months, you’ll have a pretty good idea as to which of these strategies are working well and which are wasting your money. At that point, you can thin the herd, but if you start off by investing everything into only a few strategies, you could wind up losing your entire budget in one fell swoop.
2. They Begin Marketing Without a Solid Identity
In other words, new businesses sometimes start marketing themselves before they have a right to market themselves. If you didn’t know what your skills or interests are, it would be pretty tough to find a job and get hired, right? That same principle applies to marketing: If you don’t have a firm knowledge of your brand’s identity and positioning, you have no right trying to get other people to buy from you.
Instead of marketing from the get-go, invest your money into some in-depth audience research and branding development. Hire some real professionals who understand the tenets of successful corporate branding, dig deep into the minds of your target demographics and come up with your business’s identity—in total.
Only then should you move forward with the remainder of your marketing budget.
3. They Focus on Costs Instead of ROI
In the early stages of a business, money is extremely tight. Entrepreneurs are forced to throttle their spending, keep a close eye on their cash flow and make minimalistic decisions that maximize the use of every possible dollar. Under these tight constraints, every possible purchase gets translated to an immediate dollar amount—that is to say, every investment is seen in terms of its immediate costs rather than its projected benefits.
In marketing, the value of a strategy cannot be reduced to its cost. Instead, you have to look at the return on investment (ROI). For example, a low-cost strategy with a low ROI might save you money in the short term, but it won’t earn you anything in the long run. On the other hand, a mid-cost strategy with a high ROI might cost a bit more up front, but it’s going to earn you far more benefits down the road.
For cash flow purposes, initial costs must be considered, but ROI should always be the priority.
4. They Expect Immediate Results
Marketing is rarely, if ever, a direct road to more business. Buying an ad won’t instantly generate thousands of new paying customers. Marketing strategies are more like plants—they must be planted, tended to and nurtured over time. When you’re first starting out, that means being as patient as possible and tweaking your strategies as you learn more about your environment.
Marketing strategies can only become successful once you learn from your experiences and make meaningful adjustments. Your first stab at a campaign might only generate leads at 30% of its full potential, but it will also give you information that allows you to tweak future campaigns to operate at 60% and then 90% and so on.
5. They View Marketing as Discretionary Spending
This is the biggest marketing budget mistake I see in startups, and it comes from a fundamental preconceived notion about how marketing fits into a business’ budget. Too many new entrepreneurs see marketing as discretionary spending—a strategy to throw money at only when everything else is taken care of. If you approach marketing in this way, you’ll stifle the potential growth of your business. Marketing is necessary if you ever want to grow your business or your reputation, and it should never be thought of as a superfluous expense.
As a new startup, you’re bound to make mistakes, especially when it comes to marketing. But if you can avoid these five critical, campaign-compromising mistakes and focus on learning from the other little mistakes you’ll make along the way, you’ll be in a far better position to make your business an eventual success.
Now that you know what mistakes to avoid, be sure to check out the article on how to create a small business marketing budget.