After increasing for three years in a row, the average marketing budget dipped slightly in 2018 to 11.2% of a company’s overall revenue, according to the Gartner 2018-2019 CMO Spend Survey. In 2017 the average marketing budget was 11.3% of a company’s overall revenue. However, 63% of CMOs expect their marketing budgets to rise in 2019.
Small Business Marketing Budget: Getting the Most Bang for Your Buck
Once you’ve estimated your annual marketing budget, use your marketing strategy to fine-tune it. Be realistic: If your budget isn’t large enough to cover all the elements of the marketing plan you had in mind, look for ways to do more with less. For example, could you run fewer paid ads and focus on free marketing like organic social media or organic SEO?
Of course, even “free” marketing tactics have time costs associated with them. Creating social media posts, monitoring them and responding to social media followers, for example, can take hours a day. Paid marketing and advertising tactics might have a better ROI than free tactics—even when you factor in their cost.
Now that you’ve created a marketing budget, commit to it. Many new business owners get nervous and pull back on marketing the minute their sales dwindle even a little. That’s the worst thing you can do: After all, marketing is what grows your sales.
Where to Find Free Marketing Budget Templates
Need help crafting your small business marketing budget? Try these downloadable, free marketing budget templates.
- Smartsheet has 12 free marketing budget templates including a Simple Marketing Budget, Quarterly Marketing Budget, and Annual Marketing Budget.
- HubSpot has eight free marketing budget templates.
- Visit SCORE for an Annual Marketing Budget Template. You can also get free help completing it either online or at the SCORE chapter near you. (Disclosure: SCORE is a client of my company.)
Now that you have everything you need to build your small business marketing budget—take advantage of it! Without marketing, it will be hard to scale your business. A marketing budget will help you to spend wisely as you build up your
- Many businesses base their marketing on a percentage of their gross revenues. The benefit of this approach is that your small business marketing budget will rise along with your sales. However, keep in mind that marketing generates sales—not the other way around. That means a startup business needs to budget a disproportionate percentage for marketing compared to its sales.
- To calculate your marketing budget, look at your sales projections for your first year in business. (This should be part of your business plan.) Industry organizations, trade associations, publications, and websites will have benchmark information about the average marketing budget in your industry.
- The Small Business Administration recommends spending 7% to 8% of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales. This calculation assumes your net profit margin—after all expenses—is in the 10% to 12% range.