Ellipsis logo in black color

How To Set Your Small Business Marketing Budget

You know you need to market your small business, but how much should you spend? Here’s our guide to help you figure it out.

How To Set Your Small Business Marketing Budget

One of the most important business decisions you'll make is how much to spend on marketing. Creating a marketing budget that fits your business's goals and resources is essential for achieving sustainable growth and reaching your target audience effectively. Here’s how you do it.

  • Understand Your Goals - Start by understanding your business goals. Identify your goals and rank them by priority. These objectives will shape your marketing strategy and your budget. Common business goals that impact your marketing budget include:
    • Increasing sales revenue
    • Expanding market reach and acquiring new customers
    • Building brand awareness and loyalty
    • Launching a new product or service
    • Nurturing existing customer relationships
  • Know Your Finances - Have a clear picture of your financial situation. Knowing your finances lets you determine what you can spend on marketing without risking stability. Review your current financial statements, income, expenses, cash flow, and available capital. Analyze your past marketing expenditures to understand how much you've invested in past marketing efforts. Consider the following financial aspects:
    • Monthly and annual revenue
    • Operating expenses
    • Profit margins
    • Cash reserves
    • Financing options
  • Percentage Of Revenue - You can set your marketing budget by allocating a percentage of your revenue. The percentage can vary based on your industry, business size, and goals, but it’s typically between 5% and 15% of your gross revenue and should align with your situation and goals. Here's what to consider within that range:
    • 5% - This is suitable if you have limited resources or are just starting. It can support basic marketing activities such as a website, social media, and email marketing.
    • 10% - A 10% budget is good for sustaining growth and increasing brand visibility. It allows for marketing efforts such as paid advertising, content marketing, and customer acquisition strategies.
    • 15% - A 15% budget is ideal if you’re established and want significant growth, market dominance, or expansion into new markets. This level can support comprehensive marketing campaigns, including both online and offline efforts.
  • Industry Benchmarks - Get a sense of what other businesses in your industry are spending on marketing by looking at industry benchmarks. These benchmarks can provide valuable insights into the competitive landscape and help you gauge whether your marketing budget is on par with industry standards. Remember, though, that the right budget for your business depends on your unique situation, not just industry averages.
  • Marketing Channels - Different marketing channels have varying costs and effectiveness, which can impact your budget allocation. Consider your target audience and marketing goals when choosing which channels to invest in. Marketing channels include:
    • Digital Marketing - This includes website development, search engine optimization (SEO), pay-per-click advertising (PPC), email marketing, and social media advertising. Digital marketing often offers cost-effective options to reach a broad audience.
    • Content Marketing - Content creation and distribution, such as blogs, videos, and infographics, can be a cost-effective way to build brand awareness and engage with your audience.
    • Traditional Marketing - Traditional methods like print ads, direct mail, and radio or TV advertising can be more expensive and may require a larger budget.
    • Networking And Events - Attending industry events, hosting workshops, or participating in local community events can also be part of your marketing strategy.
    • Referral And Affiliate Marketing - Referral programs or partnerships can help you gain customers through word-of-mouth and affiliations.

Your budget allocation should align with the channels that best reach your target audience and support your specific marketing goals.

  • Start Small And Grow - If you're unsure of the right budget size, try starting with a conservative budget and scaling up as you see success. Measure the return on investment (ROI) for your marketing activities and allocate more resources to the most effective channels and strategies.
  • Monitor And Adjust - Setting your marketing budget is an ongoing process. Monitor the performance of your marketing efforts and adjust your budget as needed. If channels or campaigns are generating a high ROI, consider allocating more funds to those areas. For strategies not delivering the desired results, reallocate resources or refine your approach.

By following this guide, you can create a sustainable and effective marketing budget. A well-planned budget is essential for the success of your business, so make good decisions and be prepared to adapt as your business evolves.


If you want to know more about how to set your small business marketing budget, you can read our article, “A Summary of Industry-Based Marketing Costs”, or contact us.

Tags: marketing, budget

Geoff Strauss

Related Posts

[2022-04-13] How to Decide a Budget for Your Small Business Marketing

[2022-04-19] How Much Money You Should Spend on Social Media Marketing

[2018-01-08] Three Reasons Why Local Businesses Need to Focus More on Local Search Marketing

Recent Posts

[2024-05-28] Why Responsive Web Design is Crucial for Small Businesses

[2024-05-24] Is Selling Money Lei Online a Great E-commerce Business Idea?

[2024-05-21] Grow Your Speaking Roses Franchise with Ellipsis Marketing