Are you struggling to figure out how much money you should spend on marketing? Whether you are just starting out or have been doing small business marketing for years, there’s no shortage of ways to create a marketing budget and build a profitable campaign.
First things first, thumbs up for giving marketing a priority. With so many small businesses running on a shoestring budget, some aren’t in a position to invest in marketing. And for those that are ready to spend on marketing, there’s always one major challenge: creating a marketing budget that works.
There isn’t a one-size-fits-all formula for calculating a small business marketing budget. Instead, there are a number of factors that you should consider when establishing your ideal marketing spend.
Continue reading to learn how to create a marketing budget for your business.
The SBA Recommendation for Marketing Budget
As an entrepreneur, you’ve probably heard some experts throwing some percentages around. If you’re to go with any of those percentages, go with one that’s recommended by the Small Business Administration.
According to the SBA, small businesses and startups with revenues less than $5 million should spend 7-8 percent of their revenues on the marketing budget.
This is to say, if your business makes $1 million this year, you should spend anywhere from $70,000-$80,000 on marketing.
Of course, this isn’t cast in stone, because you could be earning a million dollars and still not have enough money to spend on marketing.
So, what should you consider?
Competition in Your Niche/Industry
Market competition will always be there, but some markets are more competitive than others.
As such, one of the top factors you should consider when creating a marketing budget is the nature of the competition in your industry. If it’s fiercely competitive, you have no choice but to invest heavily in marketing campaigns; otherwise, your competitors will whitewash you.
However, if you’re in an industry where there’s low to moderate competition, you could possibly get away with spending the bare minimum.
DIY or Professionals?
A lot of small business owners opt to do marketing on their own in a bid to save money. They are strongly against paying someone to do a job that they can do in-house.
You’re free to DIY your marketing, but you risk spending a lot more money than you will when you hire a professional.
When you DIY, you’re basically running marketing on a trial and error basis, especially if you’re not a marketing expert. The last thing you want is to spend money on an ineffective campaign.
It’s best to hire an experiential marketing agency and let them do them perform the magic. The service charges you’ll pay will be worth it.
Marketing Strategy
Your marketing strategy has a direct impact on your marketing budget.
If you’re focusing on traditional marketing methods, such as television and billboard ads, expect your marketing spend to blow through the roof. But if you’re marketing on digital channels, your spending will be much lower.
As a small business, it’s best to focus on digital marketing. It’s not only cost-effective but also has a high ROI.
Create a Marketing Budget That Suits Your Small Business
When you want to build a successful business, marketing is key. However, you don’t want to overspend or underspend. With this guide, you now know how to create a marketing budget that suits your business.
Keep reading our blog for more marketing and business tips.
