Last Updated on Monday, 09 January 2012 07:52 Written by Byron Hugley Saturday, 17 December 2011 07:47

I have personally interviewed over 100 small businesses owners here in Houston for the “Go Local” segment of the SMB Power Documentary. This segment focuses on the challenges and opportunities that small business face in the current economy. It also discusses how business owners touch their local communities whether its marketing, advertising or community involvement.

 Moving into the new year many businesses are reviewing their marketing budgets for 2012. Although this number can vary based on a number of factors, for small businesses a good rule of thumb when creating a marketing budget is 1 to 5% of your gross revenue. Most of the business we interviewed fall on the low end of that range and survive mainly on word of mouth.

On the flip side, large corporations generally spend between 9 to 12% of their gross revenue on marketing, advertising, branding and PR. They not only make more but spend a higher percentage of it.

Even if you take a large corporations like Starbucks Coffee who go against industry norms and take a very grassroots approach to marketing by focusing on word-of-mouth, they still spend $40 million per year to ensure you think of them the next time you want a "Perfect Cup of Coffee" and an experience to match.

But what happens your small independent American-style restaurant that sells the family experience, how do you compete with the McDonald's Corp. who spends 10% of their gross revenue on marketing, advertising, branding and PR. In 2011, McDonald's spent $2.2 billion to ensure that when consumers think about their food it's followed with "Bah Dah Baa Baa Baa I'm Loving It"

The problem is spending 1 to 5% of your gross revenue each month on marketing, advertising, branding and PR simply doesn't translate into the customers and clients you need to grow or in many cases maintain your business.

Consider the cost of some popular forms of marketing and advertising*:

Newspapers – $1,300 per week for 2” x 2” ad
Television – $200,000 for one 30-second commercial (during prime-time)
Direct Mail - $1,500 for 1,000 4x6 postcards (includes postage)
Radio - $90 to $120 per week on a rotator (prices higher if time slots for ad are selective)
Magazines - $1,200 to $5,000 per month or per issue (depends on ad size and demographics)
Outdoor (billboard) - $3,000 to do artwork and install media on billboard; rates depend on impress level, ranges from $5,000 to $500,000 (the higher the qualify of the artwork and the larger the demographic group, the higher the price); minimum contract is 16 weeks
Online - $0.60 pay-per-click or $1,200 - $1,800 a month for aggressive campaigns (does not include search engine optimization) or $200 to $1,200 per year per banner ad on websites

*Note: Prices reflected are negotiated prices for a 12-week campaign

Even if you are a small business that generates $1 million per year in revenue and you allocate 5% towards marketing and advertising, it would take you 4 years to be able to afford a 30 second commercial on prime time television. Even the more cost effective forms of marketing can be cost prohibitive to a small business.

One of the best ways for small businesses to compete on a local level is to leverage their marketing dollars by employing a consolidated marketing strategy which includes marketing and PR. This is the same approach that many franchises use to pull money and resources for their franchisees. Through it's core principle of collaboration, "Power In Numbers" has created a way for small business owners to leverage the same strategies used by Fortune 100 and Fortune 500 companies.

$300 can go a long way when using a consolidated marketing plan. PIN has created an opportunity to multiply your marketing dollars up to 100 times or more, here in the the Houston market for small and mid-sized businesses (99 employees or less).

If you would like to learn more about this ground breaking Economic Development Company located here in Houston, Tx. and how your business can apply to take advantage of these and other benefits, visit www.powerofhouston.org.
 
The Power Of Houston
www.powerofhouston.org
The Power In Numbers Economic Development Initiative And Houston's "Power 999".