How Much Should a Small Business Spend on Marketing?
Whether you are starting a business from scratch, or you have been in business for a few years, having a marketing strategy is necessary to address customers who want to know answers in a few seconds and to be visible among your competitors.
Long gone are the days of putting up billboards, and buying TV or radio placement ads. While these may be effective for large companies, the majority of consumers are focused on social, email, search, and mobile.
But, how much should your business spend?
If you spend too much, you might be taking away from what actually matters for your business. Spending too little might keep you away from reaching your goals. If you can’t handle 200% growth in the next year, you shouldn't spend like you can.
How To Build Your Marketing Strategy
While planning a marketing strategy for your business, you should consider three areas: the location of your business, the age of your business, and the number of services you offer.
Location: Businesses located in areas with higher populations will have far more competition than lower populated areas. More competition = more money on your budget.
Age: If you are just starting out, building your brand awareness is key to success. Which includes social media, a website, blogs, and location services.
Services: If you have a variety of products or services you offer, there is a higher chance that there are other businesses that offer those same products or services. Spending more on marketing than your competitors is a sure fire way to make sure customers and clients pick your business over theirs.
Setting Up Your Budget
According to the Small Business Administration, your marketing budget should include both direct promotion (advertising, sponsorship, etc.) and brand development (social media, website, blogs, email, etc.)
The SBA states “small businesses earning less than $5 million in annual revenue should spend about 7-8% of that revenue on marketing.”
If your monthly revenue is between $5000-$10,000 a month you should be spending between $400-$800 a month or more, depending on your market.
If your monthly revenue is between $20,000-$30,000 a month, you should be spending between $1000-$2500 a month or more, depending on your market.
The Return On Investment
Compared to traditional marketing tactics, digital marketing delivers the strongest return on investment. Digital marketing gives you the ability to track exactly where your dollars are being spent and to track the number of leads coming from each marketing channel.
At Just Z Designs, we specialize in digital marketing strategies that help grow businesses. Including websites, social media management, online advertising, location services, and email campaigns.
If you’re interested in how to grow your business with digital marketing give us a call at 214-549-9909 or email us at firstname.lastname@example.org