The Harvard Business School number is 14%. Budget for 14% of your collections—that is, your net revenue.
That is the short answer. Here is a more thoughtful answer:
There are variables that affect this number. The most significant factor is the size of your practice. As a practice gets bigger, economies of scale kick in and your percentage will naturally drop. In a smaller practice, there are minimum standards for what you need to do and very little of it is free. If you use 14%, it gives you a benchmark and you can work from that number.
You should look at what you spent last year and the year before to get a baseline. Then look at everything you want to do on your marketing organizational board and make an estimate of what that would cost. You will likely find that you are under-spending. Then, based on what you want to accomplish with your goals for new patients and total patients, see how fully executing your plan would change your budget and make some very educated decisions.
Two more important things to note:
1. Budgeting for growth is always an “educated guess” process. It’s not like other departments that have obvious and easily calculated costs based on production. It means making a calculated investment. It also means being flexible throughout the year and tracking results to make the appropriate adjustments.
2. The BEST answer to this question is that you should spend as much as you possibly can – if it is working. The key is to do the right things, and the Top Practices plan is a guide to doing just that.
When your marketing plan is working, it is fun. Remember, you are in the business of marketing a podiatry practice. You might as well enjoy it.