When you create a budget it plan it is vital to factor in a “contingency budget” into your costs.
So, what is a “contingency budget”?
A contingency budget covers unexpected costs that you may not have anticipated when you drew up your original plan. There are many things that may be outside your control, such as market factors and buyer demand. Is the economy growing or shrinking?
What campaigns are your competitors launching that may impact your sales? Are your supplier/ manufacture costs likely to change over the next 12 months? These are not necessarily things you can accurately predict!
It may be tempting just to use last year’s budget, add a guesstimate on for inflation and a little bit more for good measure, but this will not give you an accurate or reliable plan on which to base your business decisions.
Although there is no hard and fast rule as to the amount you should allocate for contingency planning, we recommend that 10% of your marketing fund is set aside as a contingency. You may need to hastily pull together a campaign as a competitor launches a new product or you may find half-way through the year there is a new tradeshow you need to attend.
And, if at the end of the year your contingency budget is intact then great – you have enough in the pot for an extra campaign or to revamp your internal marketing. Or, to plough into next year’s marketing fund.
For more advice on strategic marketing and planning contact us
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