As a small business owner, you probably know you need marketing. It’s the key to driving sales, building a loyal customer base, and differentiating yourself in a crowded market. But when it comes to determining how much to spend on marketing, the waters can get murky. Without a solid plan, it’s easy to overspend or underspend, both of which can be detrimental to your business.
Why marketing is so important.
Without marketing, your business would stay a well-kept secret, and potential customers wouldn’t even know you exist. Marketing is crucial because it helps you connect with your target audience, grow your business, and spread the word about your products or services.
It’s not just about getting new customers but also keeping the ones you have that are loyal and engaged. Plus, good marketing helps with brand recognition and trust, setting you apart from the competition. In short, marketing is what keeps your business thriving and in the spotlight.
What should my marketing budget be?
There is no one-size-fits-all approach to your marketing budget. Typically, your budget is determined as a percentage of your revenue. But what exactly should that percentage be? We recommend businesses allocate 5-15% of their revenue to marketing efforts.
Why this range? Your marketing budget is going to be determined by many factors such as business size, business type, industry, goals and more. It’s important to do your research and find your industry trends to really understand and decide what your budget should be.
Industry experts dive into some of these different factors and what they mean for different businesses. For example, HubSpot provides industry benchmarks that suggest spending between 1.5% and 25% of revenue on marketing. Salesforce highlights the difference between B2B and B2C businesses, recommending that companies allocate 8% to 15% of their revenue to marketing. Meanwhile, the U.S. Small Business Administration suggests that businesses spend between 1% and 12% of their revenue on marketing, depending on their type and industry.
It’s crucial to research your specific industry to understand your budget needs. Some industries might require a more substantial investment to compete effectively, while others may thrive on a smaller budget with highly targeted efforts. Consider factors such as your business size, growth stage, and marketing objectives when determining your budget. For example, we usually see B2B businesses having smaller budgets compared to B2C, as B2C businesses require more spend for their broader customer bases.
Ultimately, your marketing budget should align with your overall business strategy and goals. By understanding your industry’s benchmarks and carefully analyzing your own needs, you can create a marketing budget that supports sustainable growth and maximizes your return on investment.
What all is included in a marketing budget?
When planning your marketing budget, it’s important to think about all the different things you’ll spend money on to promote your business. This includes things like advertisements, creating content, making sure you have a website and it’s working well, managing your social media accounts, and more. Anything and everything you do that relates to marketing your business is included in your marketing spend.
Don’t forget to budget for any technology or tools you might need to track and analyze your marketing efforts. Basically, your marketing budget is all about figuring out how much money you’ll need to spend on everything it takes to get your business out there and reach your goals.
Optimizing your spend.
When it comes to making the most of your marketing budget, there are a few ways to optimize your spend.
First, use the data you have about your customers to understand what’s working and what’s not. This can help you focus your efforts on the things that are most likely to get results.
You can also use automations to streamline your marketing processes, which can save time and money in the long run. Additionally, consider outsourcing certain tasks to experts who can handle them efficiently and often at a lower cost than hiring in-house.
By taking advantage of these strategies, you can make sure that every dollar you spend on marketing goes as far as possible to help grow your business.
Figuring out how much to spend on marketing is vital for your small business’s success. By understanding why marketing matters, setting a reasonable budget, knowing what to include in that budget, and finding ways to make the most of your money, you can help your business grow. Remember, every dollar you put toward marketing is an investment in your business’s future. With the right approach and budget, your marketing efforts can boost your business by increasing brand awareness, engaging customers, and bringing in more money.
