This is the beginner’s guide to marketing for small business owners. If you’ve ever wondered exactly how marketing works, how you can measure it accurately, or which channels you should focus on, keep reading.

What Is a Small Business?

Let’s start by clarifying exactly what a small business is – there are lots of different definitions floating around the internet. According to the ABS, a small business is any for-profit organisation with fewer than 20 full-time equivalents (FTEs). Small businesses can also be broken down into solopreneurs (no employees) and micro-businesses (one to four FTEs).

A small business is also different to a startup. Startups, regardless of their headcount, have two additional traits:

1. They’re designed to grow. Their goal is to capture as much of their total addressable market (TAM) as possible.
2. They’re going from 0 to 1, rather than 1 to 2. This means that they’re either solving a new problem or solving an existing problem in a radically new way.

So, a small business is any for-profit organisation with less than 20 FTEs that is not a startup. If that sounds like you, keep reading.

What Is Marketing?

Most people have some idea of what marketing is. Normally, that idea involves one of two things: ads or designing websites/brochures/graphics. As a result, some small business owners view marketing as ‘fluffy’ – a nice-to-have that produces pretty pictures and makes your business sound good.

Of course, marketing is much more complex than that. Like sales, finance, HR, or product development, it’s a core business function – you can’t sell people things if they don’t even know you exist. Here’s a definition from Macquarie Dictionary:

“Marketing is the total process whereby goods and services are put on to the market, usually encompassing market research, advertising and promotion.”

In a nutshell, marketing involves finding where your ideal customers are and communicating the value of your product or service to them. To communicate value, you need to seize attention, hold attention long enough to deliver your message, and have that message make sense and appeal to your ideal customers.

The Four Ps of Marketing

Traditionally, the ‘marketing mix’ comprised four Ps – product, price, place, and promotion. ‘Product’ involved everything from product policies to manufacturing; ‘place’ involved distribution, retail outlets, and wholesale partnerships; ‘promotion’ ranged from hiring sales reps to advertising; and ‘price’ involved setting pricing strategies and interacting with legislation.

Today, many of those activities are delivered by other departments, like sales, product, and distribution. Marketers are still involved in ‘product’ and ‘place’ through product marketing and market research; in about a quarter of companies, marketing departments do have control over pricing, but, in the other 75% of cases, product or finance will make the call. Most of what marketing does today is promotion – the communication of value we discussed earlier.      

What Is the Purpose of Marketing?

So, if communicating value is (mostly) what marketers do, why is marketing so important? To answer that question, we need to look at a model: the buyer’s journey funnel.

The theory behind the buyer’s journey funnel is that whenever a person purchases anything – whether it’s a bottle of water or a $500-million oil refinery – they pass through five stages: unawareness, awareness of the problem, consideration of solutions, deciding between solutions providers, and the actual sale itself. The last two stages, retention and advocacy, are idealistic – not every person who buys something will come back for more, and they won’t always tell other people about how good that thing is.

Although everyone will go through the first five stages of the buyer’s journey, how fast those journeys are varies from person to person (and product to product). Let’s say you walk into a supermarket and buy a bottle of water because you’re thirsty. When you first walked in, you didn’t realise you were thirsty (unawareness). Then your throat felt dry – your body’s automatic prompt to drink more. Now you’re aware that you have a problem (thirst). So you think about how to solve it.

Should you wait until you get home and have a glass of water? Wait, you’re not going home for a few hours – better get something now. But what? A can of Coke? An iced coffee? No, you’re trying to be healthy. A bottle of water? But you don’t like the taste of plain water. So you decide on mineral water instead. That whole process of considering solutions occurred in a few seconds, driven by lots of past experiences and personal preferences.

Now, let’s say you wander over to look at the mineral water section. You see lots of different brands (solutions providers): San Pellegrino, Santa Vittoria, Mount Franklin, and Woolworths. You’re not sure which one to choose. Then you remember that glass bottling preserves the bubbles better than plastic bottling, so you choose San Pellegrino, the only mineral water with glass bottling.

Deciding between solutions providers also only took a few seconds, and was also driven by past information. Of course, a different person might have picked a different provider – perhaps they didn’t know about the benefits of glass bottling, or perhaps price was more important, or perhaps they didn’t want to lug around a heavy glass bottle. There are so many variables in the buying journey, and so many reasons that people make the decisions they do.  

As such, marketers have three jobs:

1. Help buyers understand that they do actually have a problem (not every problem is as obvious as feeling thirsty).
2. Shorten the buying journey as much as possible by educating buyers about the nature of the problem and potential solutions.
3. Get their ideal customers (their ICP) to choose their brand as the solutions provider.

Exactly which of those three areas you need to focus most on varies between product/service categories. In new, white space categories (think: startups), you need to do a lot of educating about problems and potential solutions.

In mature categories that are highly saturated, brand is king – you don’t need to explain to someone that they have a problem, but you do need to get them to understand why your solution is the best one for them.

The Five Aspects of Marketing

Most marketing activities fit into one of five categories: research, strategy, execution, measurement and adjustment.

Research

There are two main types of marketing research: research that helps you understand the market, and research that helps you understand the offerings that your company sells. As a small business owner, you’ll probably have a deep knowledge of whatever it is you’re selling, so most of your research will focus on the market (individual customers and broad trends).

Understanding your customer is essential to the success of any business. Small business owners who know nothing about marketing but deeply understand their customers will be more likely to succeed than expert businesspeople who don’t bother learning about the people they’re selling to. Invest accordingly.

Strategy

Once you understand your customers – how the market is evolving, which channels you should focus on, what pain points motivate your customers, what other problems compete for their attention – you can start working on your strategy.

If your business objectives are your destination, your strategy is like your map. It’s the route that you’ll use to take to get to where you’re going. Typically, marketing strategies should cover things like:

• Brand elements, like style guides or logos
• Ideal customer personas
• Your strategic narrative, positioning, and messaging
• Your current marketing situation
• The distribution channels you’ve chosen to focus on
• Processes and tactical infrastructure
• Available resources
• Success metrics and attribution
• Your marketing plan (how you’re going to execute the strategy)

Keep in mind that not every marketing strategy needs to be that complex. For small businesses, a strategy can be as simple as saying: “These are the things we want to tell this group of people, and these are the places we’re going to reach them, and this is how we’re going to make it happen”.

Execution

A strategy is only valuable when it’s executed well. Execution covers your day-to-day marketing activities – posting on social media, writing website copy, sending email campaigns, producing video ads. It also includes the creation of infrastructure (like style guides) and measurement of KPIs.

There are lots of different disciplines involved in the execution of a typical small business marketing strategy. Roles you might need to hire or work with include:

• Copywriters (technicians who write words designed to drive action – think websites or ads)
• Content writers (technicians who write long-form content that educates, inspires or entertains – think blogs)
• Graphic designers (technicians who create visuals and render copy into a publishable format)
• Web designers (technicians who design website page layouts and digital experiences)
• Web developers (technicians who build websites and apps based on designs provided by web designers)
• SEO specialists (technicians who help your website get more commercially valuable traffic)
• Photographers
• Videographers
• Performance marketing specialists (technicians who manage ads on search engines and social media platforms)
• Social media managers (managers who manage and/or create assets for your social media)
• Content strategists (managers who manage content workflows and come up with ideas)
• Email marketers (technicians who run email campaigns)

As a small business owner, you probably won’t employ most of your marketing team. Instead, you might have a single in-house marketing manager who then employs an agency or freelance team to do technical work. Generally, agencies work better if you have a reasonable budget and want a hands-free approach; freelancers work better if you feel comfortable managing more moving parts and want more control over price, processes and quality.

Measurement

Measuring the success of marketing can be hard. Lots of big businesses still struggle to show how their marketing actually drives revenue.

There are two main types of marketing measurements:

• Leading indicators (which show you how likely an activity is to drive revenue further along in the buying journey)
• Revenue attribution (which classifies revenue based on marketing activities)

Leading indicators are metrics like email opens, unique page views, or post engagement. Just because someone opens an email doesn’t mean they’ll buy something from you … but it generally makes a purchase more likely. Leading indicators can be good for getting a sense of how individual activities perform and how well a channel is likely to drive revenue in the future.

Revenue attribution comes in two main forms: software-reported attribution (where software tells how a sale was driven) and self-reported attribution (where customers tell you how a sale was driven). A combination of the two is known as ‘hybrid attribution’.

Software-reported attribution is great for showing how channels like SEO or paid search have driven revenue, but it can’t tell you, for example, if someone heard about you from a podcast or has been following you on social media for years. That’s why hybrid attribution is important – even though activities like podcasting or building digital communities can be incredibly valuable, software isn’t capable of showing their impact.

When you’re measuring marketing outcomes, watch out for two things:

1. Expecting results too soon. Most marketing channels will take about three months of continuous activity to drive revenue. The exceptions are ‘direct response’ channels, like paid search or cold calling.
2. Measuring success based on leading indicators. Leading indicators are just that – indicators. They’re useful for seeing whether your efforts are hitting the right notes with your ideal customers (and which individual pieces are most popular), but that’s all. The true measure of marketing success is how much revenue it drives.

To choose the right KPIs and get your measurement systems set up, talk to a business coach or a marketing specialist.

Adjustment

Once you start seeing which marketing activities are delivering results and which ones aren’t, it’s important to adjust your strategy and tactics. If a particular channel isn’t getting any traction after three months, think about swapping it for a different channel. If a particular content type is working well, consider doubling down on it.

The key to adjustment is to avoid knee-jerk reactions. Just because one social media post flopped doesn’t mean the whole channel needs to be abandoned. Just because your podcast isn’t getting traction after five episodes doesn’t mean it’s a failure. If something isn’t working, make sure you’re not course-correcting in the wrong direction – your coach can help you use tools like root cause analyses to avoid costly mistakes.

Best Marketing Channels for Small Businesses

If you Google ‘best marketing channels for small businesses’, you’ll find lots of different websites suggesting you try things like Instagram or SEO or community-building.

Here’s the problem: you don’t have enough budget to use all those channels effectively. Even established companies typically choose a handful of core channels to focus on. So, to pick the channels that are going to drive revenue for your business, you’ll need to start with customer research.

Remember how we talked earlier about marketing being communication? Just like you call your friends or send them a message on Instagram or Facebook, your marketing channels are the way you communicate with your customers. And, in the same way that you wouldn’t send a Facebook message to a friend who never used Facebook, it’s important to avoid wasting money on channels where your ideal customers aren’t active.

There are lots of different ways to find out where your ideal customers hang out. As a small business owner, you probably don’t have a big budget to spend on market research, so let’s look at three of the most cost-effective options.

Channel-based Approach

Analysing potential channels is the easiest way to get a rough sense of where your audience is. To conduct this sort of market research, start by gathering a list of possible channels (scroll down to see our list). Once you know where to look, visit each channel and check for signs of life. Can you see people from your audience there? If they’re there, are they in a mode that’s receptive to receiving messages? How many of your competitors are present in the same place?

You can analyse channels to different extents. For example, if you were considering Instagram, you could do a rough search, spend some time on the platform, and get a gut feel for how active your ideal customers are there … or you could conduct extensive research, aggregate competitors, use paid ads to gather data, and other more complex methods.    

Audience-based Approach

If you want to skip channel-based research, you can try actually asking your audience which channels they’re most active on. You’ll need access to people who are your ideal customers, and you might need some incentives to get them to participate in your survey or interview process.

If you already have a big email list, try sending out a survey to your subscribers; sending a solus email (paying to send a survey to another brand’s email list) can also work. If you’re conducting interviews instead, start with ideal customers you know, such as family, friends, and business associates.

Third-party Research

Channel- and audience-based approaches can both take time and rely on you having a level of understanding about how marketing channels work. If you’re short on time or you’re completely new to business, third-party research can be helpful.

You can sometimes find good research reports that are relevant to your industry. For example, if your small business is a law firm, you might benefit from Clio’s 2019 Legal Trends report – it contains a breakdown of exactly which channels clients used most in their buying journeys. Keep in mind that relying on reports like these to make business decisions is risky. You generally won’t know the quality of the data, most industry-level reports won’t match how consumers buy within verticals, and old data (3+ years) may not be as relevant today.

A better option can be to use audience research tools like SparkToro. Using SparkToro, you can use demographic filters like        age, skills and interests, and employment data to see which social accounts, websites, press publications, podcasts, and YouTube channels your ideal customers engage with. You can view a list of SparkToro alternatives here.

List of Potential Marketing Channels

Here’s a list of marketing distribution channels that are popular with small businesses.

Remember: you don’t have unlimited resources. Use your research to select one primary channel (which should receive 60–70% of your marketing budget) and one or two secondary channels (40–30% of your marketing budget, split evenly). Don’t add any additional channels until you’re seeing strong, continuous revenue being driven by your primary channel.

• Organic social media
  • LinkedIn
  • Instagram
  • TikTok
  • Pinterest
  • Facebook
  • YouTube
• Paid social media
  • LinkedIn
  • Instagram
  • Facebook
  • YouTube
• Mail
  • Cold prospecting emails
  • Email newsletters
  • Direct (physical) mail
• Organic search
• Paid search
• Podcasts
• Third-party coverage
  • Press mentions
  • Partnerships and referral programs
  • Paid features
  • Guest features
  • Influencer marketing
• Physical signage
  • Storefront signage
  • Billboards
  • In-store displays
• Events
  • In-event booths
  • Networking
  • Speaking slots
• Cold outbound calls

How Much Should Your Small Business Marketing Budget Be?

Generally, small businesses should allocate 8–15% of their gross revenue to marketing. Exactly how much you decide to allocate depends on a couple of factors:

1. How mature is your business’s marketing? If you’re just starting to invest in marketing, you’ll probably need to spend money doing things like developing brand assets, building a website, and getting your chosen marketing channels up and running.
2. How much marketing do you need to drive business growth? Growth at all costs isn’t what every business owner wants. If you’re happy with how much business you currently get, and you’re confident that you can keep that revenue stream going in the future, then you may not need to invest a lot into marketing.
3. How much is practical? Although 8–15% of revenue is considered a generally healthy marketing budget, not every small business has that sort of capital, especially if they’re just starting out. Allocate what you can, but remember that investing in marketing is the only way, apart from word of mouth, that you can get new customers.

Keep in mind that 8–15% is an indicator, not a rule. You need to take all relevant factors into account and split your business’s budget appropriately between different functions. If you’re not sure how much you should be spending, talk to a business coach.

Unlike marketing agencies, business coaches won’t generally have a bias towards marketing spend – although be wary of coaches who tell you to forget about marketing and focus on sales. Given that marketing of some kind, even if it’s cold calling, needs to come before any sale, this sort of advice doesn’t make sense.

If you’re still not sure about how much you should spend on marketing, you can look at figures from other businesses. For example, the Deloitte-backed CMO Survey found that, across 320 for-profit US companies, marketing budgets averaged 10.3% of gross revenue. The survey also found that, on average, budgets were predicted to increase by 13.6% YoY.

Next Steps

By now, you should have a good understanding of basic marketing. Like most things, though, your marketing success depends on how well you action that understanding.

Unless you’re willing to spend time and money learning more about marketing yourself – either through formal education or trial and error – the easiest way to get good results is to work with a professional. There are three types of people who can help you with marketing:

• Business coaches
• Marketing agencies
• Marketing freelancers

We’ve already discussed which situations marketing agencies and freelancers work best with. A business coach is a little different to both. Unlike agencies/freelancers, most coaches specialise in business success, not one individual business function. That means they can help you hire the right people and set up basic marketing infrastructure – think of them more as a marketing consultant than someone who’s going to plan a strategy or do technical work.

A business coach can also be a useful check. If you haven’t worked with many agencies/freelancers before, it can be difficult to know whether they’re giving you the right information or not, especially if you’re dealing with complex activities like SEO. Your coach can help hold third parties accountable through objective measurement, give you a second opinion, and translate marketing jargon into language that makes sense to you.

As such, the best place to start your business’s marketing is either by hiring a coach or joining a coaching program. From there, you can use your coach’s expertise to get started and build a trustworthy, effective marketing team (your coach may even have a network of pre-qualified vendors that you can access). If there’s one thing you should take away as you start your marketing journey, it’s that marketing must be relentlessly focused on your customers.

If you try to use manipulation and tricks to sell to people, you’ll fail – either straight away or over time. On the other hand, if you aim to provide value with every interaction, you’ll build a strong, healthy brand with a loyal customer base. Marketing is never about the company. It’s about helping people find the right solution as fast as possible. Click here to book a discovery session.