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How to Decide Your Marketing Budget

Whether you have a startup or small business, you may be wondering what your marketing budget should look like. Although you probably don’t have a lot to spend, you definitely want to get your name out there and gain some market share.

Of course, all companies have different needs. However, there is a simple way to get on the right track for planning your marketing budget. This can be done for any size company with any amount of revenue.

Consider the following to determine what your marketing budget should be.

Revenue

Talk with your CFO, financial department or accountant about what your gross revenue or estimated revenue is.

  • Your gross revenue is the amount of revenue received before any deductions or allowances, such as rent, cost of goods sold, or taxes.
  • Your estimated revenue is the projected amount of earnings for a set accounting period.
  • For our example, we set a company’s gross revenue for this accounting period at $200,000.

Company size

Newer companies typically need to push their advertising more than established businesses. This makes a difference in establishing a brand and gaining loyal customers.

Established companies usually require less advertising because customers know and regularly purchase their products or services. For our example, we have a startup that has been operating for 3 years and has 15 employees.

Marketing budget allocation

If your company is new, you should set aside at least 12% – 20% of your gross revenue for marketing. If you feel this is a lot, keep in mind you have an incredible product or service that could revolutionize your industry, and few people are purchasing it. It’s likely because a small number of people have heard about what you have to offer.

  • Word-of-mouth advertising goes only so far.
  • Your new business needs to advance to the next step.
  • Your marketing has to bring in new customers and leads and establish your brand.
  • Once your brand is established, you can reduce your marketing budget.

If your business is established, you should dedicate at least 6% – 12% of your gross revenue to marketing.

Keep in mind that you have loyal customers who continue to make purchases. This is why you don’t have to advertise as much.

In our example, our startup with a revenue of $200,000 is allocating 17% of its gross revenue to marketing. So, we take the $200,000 revenue and multiply it by our 17% marketing percentage to get a marketing budget of $34,000 for the current accounting period.

How can BARQAR help?

If there’s anything we can do to assist you, please give us a call. We’re here to provide the advice, resources and cost-effective solutions you need to market your business.

Smart Marketing

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