How to Set Your Small Business Marketing Budget

It’s a question a lot of small business owners ask themselves: does my business actually need marketing? The answer is an unequivocal yes! Whether you’re just starting out, or you want to give your business an extra boost to take it to the next level, setting a marketing budget is essential. But if you have no experience in marketing it can be hard to imagine where to start when it comes to setting a budget and potentially outsourcing your marketing needs. Following is a quick guide to get you started:

Step 1.) Establish A Marketing Plan

According to Threaded Marketing Group Founder and President Kelly Jo Jefferis, “Whether you’re a small business or a big business—you need a plan.” If you haven’t established a business plan, do. “You should always be looking 3-5 years out, and your marketing plan should support your business goals.” If your business goals are, for example, to raise brand awareness, use that as a jumping-off point to help you get into specifics, such as creating a social media campaign, determining how many posts you want per week, how much you want to spend on social media advertising, and so forth.

Step 2.) Consider Your Business Type and History

Many business owners want to know what the recommendation is for how much revenue to spend on marketing—but there is no one-size-fits-all solution, as there are many factors at play. It’s important to take some time to completely examine your business to get a sense of how much you should spend. For example, are you a business-to-consumer (B2C) company or a business-to-business (B2B) company?

According to, B2C companies need to spend more on marketing to capture consumer interest and spend an average of 9.6% of their revenue on marketing—as opposed to B2B, which spend an average of just 6.3%. Also, consider whether your business is established or new. Per the same article, If it’s a new business, you’re going to want to spend between 12%-20% of your revenue to establish your brand and generate sales. However, if your business is already established, you may spend between 6-10%. For

Step 3.) Evaluate Your Competitors’ Strategies

If you are hitting a wall and would like additional guidance on what your goals should be and how much you should spend, Threaded Marketing Group’s Strategic Marketing Director Cindy Johnson suggests you look at your competitors for insight. “If your competitors are spending a certain amount of money on pay per click advertising, for example, that can be a good guide for your business as well.” By looking at what several of your biggest competitors are doing well, you can see the areas you should focus on, and how much to invest in your business.

Step 4.) Plan for the Unexpected Expenses

When planning their marketing budgets, a major misstep businesses make is not thinking ahead. Jefferis explains, “Maybe one of your biggest clients asks you to do some community involvement or a charity run. Having guidelines on what you will add and what you will not add to your marketing budget will give you some cushion to make that happen.” By planning for these extra expenses, you can protect your budget and make sure you stay on track to achieve your marketing goals.

Step 5.) Calculate How Much Things Will Practically Cost

According to Johnson, another stumbling block businesses make in setting a budget is not truly understanding how much things will cost. “Let’s say a business needs business cards—not only do they need to pay the cost of a graphic designer to design the cards, but we also need to know how much the direct cost is to print and ship the cards. Those direct costs can add up if you don’t plan for them.” Similarly, Johnson notes businesses don’t often consider management costs. Consider social media, “People may want to post several times per month, but to do that efficiently, you might need a third-party software, like Hootsuite, to make that work efficiently, and there’s an additional cost that comes with that.” Knowing the practical costs of your marketing efforts will help you budget better for yourself and create achievable and realistic goals.

Step 6.) Remember—Marketing Is Essential for Success

When you’re developing a marketing budget and feeling apprehensive about the costs, it can be easy to write marketing off as an unessential expense. But as Jefferis notes, “The whole point of marketing is to support the business. If you want to grow, you will need some sort of marketing budget.” Johnson adds, “You might have a great product and great customer service, but it’s possible someone else has the same thing.” That’s why marketing—and a marketing budget—is so critical for your business. “Marketing establishes what makes you different and what makes you better. Setting aside time, effort, and dollars to communicate and promote those differences will take your business farther in the long run.”

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