How Much Should a Small Business Spend On Marketing

UPDATED: 
July 14, 2021
How Much Should a Small Business Spend On Marketing

Determining the proper marketing budget is a daunting task for any business. Small businesses and startup companies especially must maintain an equilibrium of revenue to costs while still investing resources into market growth campaigns. The big question arises: how much should a small business spend on marketing?

The Small Business Administration in the U.S recommends, "As a general rule, small businesses with revenues less than $5 million need to allocate 7-8 percent of their revenue to marketing." This percentage is based on companies with margins in the 10-12% range (after expenses).

When it comes to a budget, many other factors need consideration. For example, the type of industry or size of business can affect how much is spent. A company just getting their feet off the ground might spend up to 20% of sales on marketing, whereas established companies may be able to reduce this spending percentage down by half and still maintain growth rates due in part because they've already built brand awareness within those industries.

Marketing is very important to a business. Regardless of how much you have set aside for marketing, all businesses can get benefit from a system of checkpoints in order to ensure marketing budgets are used to their fullest potential. Here are a few ways to restrain wasted marketing spend:

  • Have a qualified marketing plan. Outline costs and plan how you are going to achieve goals within a reasonable time frame. For help on creating a marketing strategy, check out Does Your Business Have an Effective Marketing Strategy? or How to Set up the Perfect Annual Budget for your Small Business.
  • Track return on investment (ROI). Track your spending and the effectiveness of all activities - with tools such as Google Analytics, call tracking or simple spreadsheets. If one quarter was more profitable than another, investigate why; just put in a little bit of time to track what works for you!
  • Revisit your plans. Recognize that your original marketing plan is flexible and can be adjusted as necessary. Remind yourself of your goals, evaluate how well you're performing throughout the year; there's no guarantee it will succeed, but if you know whether or not spending achieves targets and are willing to make changes- then all good!

FAQ's

How much does a small business spend on advertising?

37% of small businesses spend less than $10,000 on advertising each year. 20% put between 10-50k towards their marketing and just 7% more over 1 million per year.

How much time a small business should spend on marketing?

In a survey of small business owners, they said that, on average, they spend 20 hours per week marketing their businesses. They do this across multiple platforms, and 82% say it's important to them.

How much a small business should spend on Google ads?

A typical small local business budget is typically somewhere in the $2,500 – 7,500 range.

How much should a small business spend on social media marketing?

According to an analysis conducted by The Content Factory, the average organization spends $6-10k per year on social media marketing. 

What are the best marketing strategies for a startup business?

You will have a clear idea about digital marketing strategies to boost your startup growth.

  • Social Media Marketing.
  • Email Marketing.
  • Search Engine Marketing.
  • Search Engine Optimization.
  • Influencer Marketing.
  • Content Marketing.
  • YouTube Marketing.
  • Viral Marketing.
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