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A question that I get asked a lot in my line of business as a small business marketing consultant is “How much money should I be budgeting for my marketing activity?”

This is a really valid question and I’m sorry to disappoint you, but there is no magic number.

There are definitely some magic percentages that you can aim for that are a fairly solid benchmark for you to judge from.

 

There is no solid number in terms of spend

I’m not going to tell you that you should be putting $500 per month towards your marketing budget.

The reason for this, as I’m assuming most of you would know, is that every small business is completely different.

You have small businesses across so many different industries and the scope of small business can mean anything from five employees to even a hundred employees.

So, obviously the needs of every different businesse’s marketing budgets are going to be quite different.

Honestly, even if you have two really similar looking businesses that provide the same service within the same industry and employ the same amount of people, you might have one of those businesses who have some really ambitious growth plans, and they’re going to actually require a lot of marketing to achieve those.

Then the other business that looks exactly the same might not have such ambitious growth plans. So that’s actually going to be a different story when it comes to their marketing.

 

There is no one size fits all

However, there are some benchmarks that you can work towards.

If you are a small business who does fall into the category of having some ambitious growth plans, for example you might be a startup or you might be an established business that has decided to now focus on different geographic areas, have a particular campaign, or might be launching a new product.

Whatever the reason is, if there are some hefty growth ambitions for your product or service or your business, your marketing budget should be around 10% of your revenue.

If you are a business that doesn’t have massive growth plans, you will certainly still want to invest in your marketing because you want to maintain your market share.

More importantly, building a sustainable business will obviously help you with the succession planning of your business if you do plan to sell the business or want the business to be valuable at the end of your tenure.

There will be periods of time where you might not have those solid growth intentions. It is still worth investing in marketing to make sure that you’ve got a continual stream of customers being fed into your sales and marketing channels so that you’ve got enough business to maintain where you are. Maintenance mode, if you like.

 

Percentages to aim for

The figure I would aim for maintenance would be around the 3 to 5% mark. So, 3 to 5% of your annual revenue for maintenance and 10% of your annual revenue if you’re actually looking for some bigger growth.

Hopefully, that’s helped to answer that question for you.


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Podcast Transcript:

Jane Hillsdon:

A question that I get asked a lot in my line of business. As a small business marketing consultant is, how much money should I be budgeting for my marketing activity? Really, really valid question. And I’m sorry to disappoint you, but there is no magic number. There are definitely some magic percentages that you can aim for, and that are a fairly kind of solid benchmark for you to judge from. However, there is no solid kind of number in terms of, I’m not going to tell you that you should be putting $500 per month towards your marketing budget. And the reason as I’m assuming most of you would know is that every small business is completely different. You have small businesses across so many different industries and, you know, the scope of small business can mean anything from kind of five employees to two, even like a hundred employees.

So obviously the needs of every different businesses marketing budgets are going to be quite different. And honestly, even if you have two really similar looking businesses that, you know provide the same service within the same industry employ the same amount of people. You might have one of those businesses who have some really ambitious growth plans, and they’re going to actually require a lot of marketing to achieve those. And then the other business that looks exactly the same might not have such ambitious growth plans. So that’s actually going to be a different story when it comes to their marketing. So there is no one size fits all. However, there are some benchmarks that you can work towards. So if you are a small business who does fall into the category of having some ambitious growth plans, so you might be a startup or you might be an established business that has decided to now focus on different geographic areas.

You might have a particular campaign, you might be launching a new product. Whatever the reason is, if there is some kind of hefty growth ambitions there for your product or service or your business, I would aim for around the 10% of your revenue mark. So your marketing budget should be around the 10% of your revenue. If you are a business on the other hand, that’s not really, you certainly want to invest in your marketing because you want to maintain your market share. And more importantly, you know that building a sustainable we’ll obviously help you with the succession planning of your business. You know, if you do plan to sell that business, or if you want that business to be valuable at the end of your tenure. So there will be periods of time where you might not have those solid kind of growth intentions, but you know, that it’s worth investing in marketing to make sure that you’ve got a continual stream of customers, you know, being fed into your sales and marketing channels so that you’ve got enough business to kind of maintain where you are maintenance mode, if you like.

That figure I would aim for around the 3% to 5% mark. So 3% to 5% of your annual revenue and 10% of your annual revenue, if you’re actually looking for some bigger growth, hopefully that’s helped you fix that.

 

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