How to Set a Marketing Budget for Your Business
In the early stages of a company's success, many entrepreneurs try to avoid setting a marketing budget. We're here to tell you, it's not as intimidating as it sounds. See our tips for getting the most for your money.
1. Define Your Marketing Goals
A company's marketing budget should be customized to fit the needs of the company. Do you need more sales? Do you want to create brand awareness locally or nationally? Do you want to use marketing to revitalize relationships with existing customers?
2. Evaluate the Stage Your Business is in
For new businesses, it is widely recommended to spend between 8-10% of your revenue on marketing. However, there are exceptions for businesses in high-competition industries.
If you're industry is highly competitive, your budge can range anywhere from 12-20% depending on how high your operating costs are.
For established businesses, with at least $5M in revenue, 12% is standard budget allocation.
Additionally, understand that marketing drives revenue. Meaning you need marketing to grow as a company. Creating a marketing plan with a professional is one way of making sure this occurs.
"Marketing Drives Revenue"
It's highly likely that you won't KNOW the magic number until you test multiple marketing strategies, and evaluate which ones work best. This should be factored in to your marketing plan from the beginning. Marketing investment is a necessary risk.
4. Don't Panic
Easier said than done. However, building up your marketing presence to accomplish your goals takes time. Make sure you look at how your marketing investment will pay off long term! You may not see direct results within the first couple months, but a successful marketing plan should increase your over-all revenues within the first year!
For clarification on marketing budget spending by industry, check out this helpful graph: