We get asked how much a small business should put towards marketing efforts, so here’s our answer. Based on our experience in this sector, here’s what we recommend small businesses spend on marketing.
If you are a business owner who is struggling to figure out what the figure should look like, here are some important questions you need to answer.
1 – How much does your business currently spend?
Depending on where your business is right now, you may need to increase or decrease your marketing budget. Are you already doing some marketing? Then if you do not see the results you want, you may need to further your marketing efforts. If you’re already doing a lot of marketing, you may need to scale back while you look at how effective some of your efforts are.
2 – How much do you expect to make?
Before you get into determining your business marketing budget, you need to know how much your business needs to make.
As you may have guessed, the amount you spend will be connected to the amount you need to make.
If you have a bigger revenue goal, then you’re going to need to spend more money on your marketing efforts. If you have a smaller revenue goal, then you don’t need to spend as much.
3 – How much did you spend on marketing last year?
This question is important because it tells you the baseline of where your marketing budget should start at. You should slowly increase your marketing budget. If, for example, you spent $1000 last year, and you want to spend $2500 this year, you need to work your way to that while still increasing the bottom line.
This keeps you from making sudden changes that might not have a big enough impact.
4 – How much of that budget yielded good results?
This question is important because it points you to where you should focus your efforts for the coming year.
If you included outreach in your marketing budget and you saw a lot of good results, then you should pursue that direction again next year.
But if you saw little to no results, then you may need to look into alternatives.
5 – Do you want your growth to be faster, or the same, as the previous year?
The last question you need to answer is if you want to grow your business by the same amount as last year or if you want to grow faster.
If you want to grow your business faster, then you can’t spend the same amount as last year.
This is where you will need to do more research and go deeper into your budget, looking for ways to cut expenses and still make your business grow.
General Rule of Thumb
For the most part, you should be looking to spend about 10% of your revenue on marketing. Your marketing budget should be whatever you need to spend to get the results you want to achieve. In a nutshell, if you want your business to be able to surpass the goals you reached in the previous year, you need to look into putting more into your marketing budget.
If you are looking for ways to improve your marketing strategy, come to iirth! We are a collective of creative thinkers and designers who always work hard to make our clients happy. Contact us today!