The first question we are often asked? What SHOULD I be spending on advertising and marketing?
The truth is marketing budgets vary by industry and business size.
Your budget is also based on how much you want to grow, and how fast. And don’t get caught thinking you are saving money by having a stingy marketing budget. You could also WALK to work to save on gas, but that may not be the most efficient approach.
Both the Counselors to America’s Small Business (SCORE) and the U.S. Small Business Administration (SBA) define a proper marketing budget to be between 2% and 10% of gross sales, noting that B2C (business to consumer) retail and pharmaceuticals can exceed 20% during peak brand-building years.
As for size and spending, companies less than $5 million typically allocate 7-8%, less than $10 million firms budget 6-7%, less than 100 million ventures spend 5-6%, $100-300 million behemoths come in at 3-5% and more than $300 million monsters set aside 3-4% for marketing.
This budget covers the full range of marketing tools – from sales materials to online presence to social media to mass advertising to public relations.
Sure you try to grow by “word of mouth”. Direct referrals from customers and friends are “gold”, but you risk losing revenue from business you did not get because a large percentage of very targeted prospects have never heard of you.
Marketing is a critical ingredient – as are human resources, finance and operations. It is an on-going effort to remain relevant, top of mind and entice new customers.
Having too small of an advertising budget is like planting a seed, but not giving it water or light.
Budget 45 minutes for a marketing audit and we’ll provide you with both a marketing budget and a comprehensive marketing outline to grow your business.