How Much Should You Spend on Marketing?
Ever wonder how much you should spend on your marketing budget?
Let’s talk dollars baby!
This is probably one of the most complicated questions clients ask us. First and foremost, when it comes to your marketing budget we believe there is always something you can do at any price point!
On the other hand, as a small business owner you are your best when you’re working on your business - not necessarily when you’re writing the blog, updating social, sending the sales email, and all the other valuable marketing tasks you can outsource to a team that you trust!
So … when it comes to you marketing, how much should you be spending? Like most decisions you have to make for your business, a little bit of planning goes a long way so we’re digging into the tools and planning you need to create a marketing budget you can feel good about.
Make a Marketing Budget
You want to generate more revenue, so you need marketing to grow your business. But you need revenue to pay for the marketing that will generate that revenue. And around the circle, we go.
What you spend on your marketing is greatly dependent on the stage of your business however one of the biggest misconceptions is that you should wait to invest in your marketing until you’re more established.
While cash flow can be limited in a business at any stage, often times investing in your branding and marketing at the beginning will help save you a lot of time and money in the long run. Not to mention make it easier to attract and keep more clients and thus more revenue!
1. Established Business
When it comes to setting your marketing budget, the U.S. Small Business Administration recommends that small businesses spend 7-8% of their gross revenue on marketing. That’s if you’re doing less than $5 million a year in sales.
2. New Business
If you’re a new business, you may need to spend over and above that to launch key marketing tools such as your website, logo and branding, print material, etc. In fact, most new businesses spend 25-35% of their gross revenue on marketing to build their foundation.
3. Growth Phase
Whether you are updating your brand and website, launching a new product, or serving a new client demographic, you want to budget for additional marketing dollars when you are going into a growth phase.
For those who like to plan for the future, expect to see another round of a higher percentage of spending 2-3 years after your business launches. Most businesses go through various changes in their first couple of years, so websites and branding often need a revamp to reflect their new direction.
It’s also good idea to do a yearly audit of your brand and website to make sure your brand, offerings and marketing are aligned with the direction your business is going. Markets change and audiences evolve. Checking in annually is essential to keep your business relevant.
What To Invest In
When you look at the list of marketing action items you could be doing to grow your business it can be overwhelming to figure out where to start and how much it should cost - especially if you’re on a limited budget!
The good news is that you don’t have to do everything at once. By understanding what your sales goals are you can start picking strategic marketing initiatives that will help you get there the fastest. However that doesn’t help you understand what you should be paying for those things.
Often times when you call around for quotes you can get a range from $500-$50,000. So how are you to know what you should be spending? Whether you are looking for a DIY solution or a customized option more tailored to your unique needs, costs vary GREATLY based on the scope and timeline of your project.
For example:
If you are looking for an updated website, a 3-5 page template customization is very different than a brand identity and content overhaul or creating an e-commerce option for your website.
You can outsource things cheaply on websites like Fiverr or Upwork but remember the implementation is just one part of the equation. Make sure you have a strategic plan of attack to help you reach your goals.
At the end of the day you get what you pay for. A logo contest on 99designs is completely different than a customized brand identity created by a seasoned graphic designer but depending on your business model and budget you can find an option that works best for you.
Most of our clients call wondering how much certain marketing tasks should cost so we put together some general costs. Don’t let the numbers below make your head spin - with the advice of a trusted marketing advisor you can create a strategic action plan for any budget!
When To Outsource Your Marketing
As a small business owner, marketing is often an afterthought when your day-to-day operations are competing for your attention. It’s possible to be self-taught when it comes to learning how to build a basic website, manage Facebook or Google ads, or attend various networking events. But do you have the time?
One of the benefits of outsourcing your marketing is having a dedicated marketing team to get expert, strategic advice so you don’t play with tools that won’t work for your business.
More than just advice, a dedicated marketing team can deliver objective strategic direction and implementation. Removing the additional responsibility of human resources means you can focus on running your business and leaving the marketing to your outsourced team.
Hiring an employee to do your marketing is costly and unsustainable, especially when your small business is growing. You want to be able to hire help when needed, as needed. Working with a consistent partner who knows your brand can save you time and money. Most importantly, it’s going to be more effective.
Getting Started
Sure, everyone needs marketing at some point, but getting the timing right is key to making the most use of every single dollar you invest.
If any of the following scenarios apply to you, it’s time to kickstart or boost your marketing efforts:
You’ve just launched a new business, product or service
Your business has maintained similar revenues year over year and you’re ready to grow
Your business is doing well but your marketing doesn’t reflect who you are or what you offer today
If you’re not sure what level of marketing is right for your business, give us a shout! We’re small business owners ourselves, so we look out for our fellow hustlers. If we don’t think you need marketing, we’ll tell you, straight up. If you do, we can help guide you in the right direction, whether you decide to work with us or not.
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