Many businesses will plan to budget a certain percentage or their actual or projected gross revenues to put toward marketing. This varies with the size of the business and whether the business is established or just starting out. As a dealer, your marketing budget might also fluctuate with the seasonality of the business and if/when new brands or products are added to your offering.
"For an established dealer it should be 3% of gross sales utilizing both the money and co-op from their vendors,” says Bob Clements, a dealer consultant with Bob Clements International. “For a new dealership it should be 5% of projected sales for the first four years, then back to 3%.” Dealer Dan Weingartz says he will spend between 3-4% of his revenue on marketing each year.
Here are some other guidelines for building and maintaining a marketing budget that works for your business.
- A marketing budget should not be based on just what’s left over once all other business expenses are covered.
- Maintain budgets annually and revisit them with the launch of a new product or service.
- Plan for a 12-month period and adjust your spending in peak seasons.
- Consider one-time costs like developing a website or things like ad campaigns that have ongoing costs.
- Marketing dollars should be split between promoting your dealership products and services and promoting your business with events and campaigns.