The giant stores in New York, Chicago, or Los Angeles fully capitalize their window value, but smaller stores often waste them. The sales budget is the foundation of all business. It affects profits and costs, including the advertising investment. In preparing the advertising budget, first decide what percentage of your anticipated sales volume you will allocate to advertising. This percentage will vary according to the condition of the business, local competition, and the nature of your products.
Trade journals offer comparative percentage statistics on an industry-wide basis.
By multiplying your total anticipated sales by the percentage, you will get the total amount of advertising money you can budget for the year. Then, many owner-managers find it convenient to base their advertising on their planned sales for each month. For example, if March contributes 8 percent of the year's sales, they plan to spend 8 percent of the advertising budget for that month. This way you can base your advertising for each month on the planned sales for that particular month. One exception to this approach is the Christmas season, which contributes as high as 25 percent of yearly sales for some businesses.