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It's that time of year again
- time to prepare next year's Marketing budget. Of course, this year, budget
planning has seemed like a year-round process, with many companies re-planning
almost every month.
Still, the budget
planning exercise your company goes through over the next few weeks
will determine what you can achieve next year. So, here are five key
tips to make sure you survive Budget Season - and get the budget you'll need to
succeed in the coming year.
Tip 1 Budget Time is
Planning Time
You can’t develop a marketing
budget without developing some level of plan for using the money. And, a
Marketing Plan must include budget impacts. To be blunt, a Marketing Plan
without a budget is just wishes and dreams; a budget without a plan is a lot of
money about to disappear, fast!
So, the first key to success
is to develop both your Marketing Plan and your Marketing Budget, together.
Tip 2 The "Goldilocks"
Marketing Plan
The second key will help you
downsize your Plan a bit. Focus on the pieces of your Marketing Plan that are
critical to developing a successful budget for next year. Remember how
Goldilocks found the porridge that wasn't too hot, not too cold, but "just
right"? Well, you need a Marketing Plan that isn't too much or too little - but
just right.
A comprehensive Marketing
Plan will cover three broad areas: Market Definition,
Product Definition, and a Communications Plan. Early in a
company's (or product's) life cycle, the focus is on Market Definition (and
sizing!) and Product Definition; the Communications Plan is often deferred or
pretty speculative.
But during Budget Season, you
generally have the info you need about the Market (revenue goals,
average selling price, sales cycle) and Product.
Your focus should be on the Communications Plan and, within that,
on the programs that will most impact the budget.
Tip 3 Separate Personnel
and Programs Costs
Narrow the focus of your
Budget planning by putting most of your effort into your Marketing
Programs Budget, rather than your Personnel Budget.
Personnel costs tend to be
fixed, while Programs costs are highly variable. This makes Personnel costs very
predictable. You can easily (and quickly) project your Personnel Budget needs by
looking at last year's budget, and factoring in adjustments for raises and any
new positions.
The Programs budget is
bigger, much more flexible - and much harder to predict (which often makes CFOs
and CEOs - and Marketing VPs! - nervous). Your Marketing Programs budget is
determined by your Communications Plan: how many ads, tradeshows, direct
marketing campaigns and product rollouts, etc., you'll execute.
So, focus on your Marketing
Programs budget during Budget Season.
Tip 4 Negotiate Only What
You Need
You'll have to negotiate
several different deals to execute your Communications Plan next year. It would
be difficult, if not impossible, to do them all in the midst of the frenzied
Budget Season. Fortunately, there's no need to.
Your goal is to be certain
your budget is sufficient to execute the programs you've planned. No one is
going to complain if you are able to negotiate an even better deal when the time
comes - but you will be expected to do what you said with the money you've got.
So, you can use
standard pricing for many budget items for now. But, this can be a good
time to negotiate some costs. For example, you may be able to
negotiate a very good price for key media buys now, especially if it's the end
of their fiscal year, too.
Tip 5 Respond Quickly to
Change
The budget planning process
is an iterative negotiation. You'll submit your initial Budget (and Marketing
Plan), and then you'll be asked to make changes (usually, but not always, to
reduce expenditures). This cycle will probably be repeated more than once. You
can justify the budget you'll need by responding quickly, with a solid budget
and plan.
To accomplish this without
making budget preparation a career, submit an initial Marketing
Communications Plan with your initial budget. This makes it easy to
understand your proposal. (Note: clearly mark this plan "DRAFT - Subject to
Final Budget Approval".)
Prepare your Marketing
Programs Budget on a flexible set of linked Excel spreadsheets that allow
quick and easy revision, and automatically roll the programs up into a
management summary view.
Turn in updated budget
numbers with each revision, but don't update the full Marketing Communications
Plan - just make notes on the budget spreadsheet. Once the final Budget is
approved, update your final Marketing Communications Plan.
By following these 5 Keys,
you'll be able to survive Budget Season - and get the Plan and Budget you need
to succeed next year.
We'll go into more detail in the next few issues. If you can't wait, get
our free white paper,
Surviving Budget Season, for the full scoop
now...
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