It's that time of year again - time to prepare next year's
Marketing budget. Of course, budget planning sometimes seems like a
year-round process, as you introduce new programs to counter
competitors' moves or economic changes - and modify your budget to cover
the changing costs.
But Budget Season is special - concentrated and intense, and it
comes just when you have to deal with other important matters (like
end-of-year objectives!).
Still, the budget planning exercise your company goes
through over the next few weeks is critical - it will determine what
you can achieve next year. So, here are seven 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; and a budget without a plan is a lot of money ready to disappear,
fast!
So, the first key to success is to develop both your Marketing Plan
and your Marketing Budget, together. That may sound like more work - so
see the next tip.
Tip 2 Develop a "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 detailed or too high-level - 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, your focus should be on the
Communications Plan and, within that, on the programs
that will most impact the budget. You generally already have the info you
need about the Market and Product - revenue goals, average selling price,
target market and sales cycle. These are usually enough to plan the budget
you'll need for the programs that will meet your goals.
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, which 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. (If you're starting from scratch, use a good
salary survey or recruiter to ball-park salaries. And don't forget to
factor in "fully burdened" costs for benefits, equipment, etc. - ask your
CFO for guidelines.)
Programs costs, on the other hand, are highly variable. The
Programs budget is bigger, much more flexible - and much harder to
predict. This often makes CFOs and CEOs - and Marketing VPs! - nervous, so
you'll have to show you know where the money is going.
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 you need high-level plans - sizing, not
detail - for these activities.
So, focus on your Marketing Programs budget during Budget Season -
and have enough backup detail to justify your budget request.
Tip 4 Don't Over-Negotiate
You'll have to negotiate several different deals to execute your
Communications Plan. 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 accomplish what you said you'd do, with the money you've
got.
So, you can use standard pricing for many budget
items for now. For example, it's enough to use the standard media guide
rate for the number of insertions you want to run in a publication, even
though you can probably negotiate a better rate later. Or, if you're
budgeting for tradeshows, you should know if you'll be using a custom
rental, or building your own booth, and the size you want - but you don't
need to have all the design details worked out yet.
On the other hand, 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 at the end of the year, 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 second
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.
(They don't want to see all the detail you need to develop the budget -
but you'll have it if they ask.)
Turn in updated budget numbers with each revision, but don't update
the full Marketing Communications Plan - just make notes on the budget
spreadsheet and/or summarize the changes in your cover letter. Once the
final Budget is approved, update your final Marketing Communications Plan.
Tip 6 Think "Training Camp"
Budget Season can be frustrating - it seems like a lot of hassle
just when you really need to focus on executing year-end programs. And the
multiple revisions, short deadlines, and inter-departmental battles can
seem… "unproductive".
But this is nothing compared to the pressure of reacting to market
changes or competitors' flanking strategies while executing your marketing
plan. Then, you really will need to "change the tires while the bus is
moving" - and the tools and techniques you've developed in the relatively
friendly confines of Budget Season will enable you to react more quickly,
more effectively - and more successfully - than the competition.
So don't get discouraged - remember that this exercise will prepare
you and your team for the real competition to come!
Tip 7 Use These Keys and Succeed
There seems to be some sort of "rule" that you always need seven
tips in an article - something to do with the Feng Shui of authorship, no
doubt! But this may be the most important Key of all: the six "battle
tested" keys above will help you create the plan you need in the time you
have - but they won't do you any good unless you use them!
So follow these 6 (or 7) Keys, and you'll be able to survive Budget
Season - and get the Plan and Budget you need to succeed next year.
Want more great tips?
You can get our free white paper,
Surviving Budget Season, loaded with more tips, at
www.MarketingAcumen.com/offers/Budget1001wp...
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