WHY marketing matters
For every business, marketing is essential to profitability and growth. Yet, according to the U.S. Small Business Administration, many small businesses don’t allocate enough money to marketing, or they spend their marketing dollars haphazardly.
More likely than not, small business owners lack experience developing and implementing a realistic marketing plan and budget.
Many businesses allocate a percentage of actual or projected gross revenues to marketing, usually between 3–5% for small businesses. But the correct allocation actually depends on several factors, including your industry sector, your business capacity, the amount of growth you can reasonably handle, and how quickly you need to make an impact.
A good rule of thumb for small businesses with revenues of less than $5 million is to spend 7–8% of revenues on marketing, with the budget split between 1) brand development costs, including all the channels you use to promote your brand, e.g. website, social media, sales collateral, and 2) the costs of promoting your business, e.g. ad campaigns, traditional and digital advertising, events.
Note that the 7–8% rule assumes that your business will have revenue margins of 10–12% after expenses, which will include your marketing budget.
If your business’ margins are lower than 10–12%, you should consider lowering your overall margins and allocating additional spending to marketing. While this is a tough call for some business owners to make, you should not base your marketing budget on what’s “left over” once all your other business expenses are covered.
More likely than not, small business owners lack experience developing and implementing a realistic marketing plan and budget.
Many businesses allocate a percentage of actual or projected gross revenues to marketing, usually between 3–5% for small businesses. But the correct allocation actually depends on several factors, including your industry sector, your business capacity, the amount of growth you can reasonably handle, and how quickly you need to make an impact.
A good rule of thumb for small businesses with revenues of less than $5 million is to spend 7–8% of revenues on marketing, with the budget split between 1) brand development costs, including all the channels you use to promote your brand, e.g. website, social media, sales collateral, and 2) the costs of promoting your business, e.g. ad campaigns, traditional and digital advertising, events.
Note that the 7–8% rule assumes that your business will have revenue margins of 10–12% after expenses, which will include your marketing budget.
If your business’ margins are lower than 10–12%, you should consider lowering your overall margins and allocating additional spending to marketing. While this is a tough call for some business owners to make, you should not base your marketing budget on what’s “left over” once all your other business expenses are covered.
DON'T BE A STATISTIC. GO BALLISTIC!
