Products and services don’t sell themselves. All too often though we hear of startup businesses, who allocate precious little to their small business marketing budget, who then when failing to see their business take off, face critical decisions. It is one of the biggest contributing factors to business failure.

Unfortunately, there is no one size fits all. Consider two shops in the same town. One with a strong High Street presence and good footfall, the other tucked away up a quieter street. The first will obviously have higher rent and rateable costs so hopefully will have to spend less than the other whose costs are lower but marketing need greater.

Further, consider a new business over an established one with a loyal customer base. Marketing spend for the new company that needs to establish themselves quickly, we may think is going to be greater than with the established company. However, this company, in order not to stand still, will probably seek market growth and retention. Overall, therefore, their individual spend may be the same however their focus will be different, with the first concentrating on market and product development and the second placing greater emphasis on market penetration and potentially diversification.

All said this does not help much when determining your marketing spend strategy. Here are some tips to get you started:


How to Calculate your Small Business Marketing Budget

Many businesses allocate a percentage of actual or projected gross revenue – usually between 3-5 percent for established business marketing and between 5-10 percent for start-up marketing. But that allocation depends on several factors: your industry, the size of your business, and its stage of growth. For example, during the early brand building years, retail businesses spend much more than other businesses on marketing – up to 20 percent of gross revenue.

As a general rule, your marketing budget should be split between brand development costs (which includes promotion channels such as website, blogs, sales literature, etc.), and the cost of promoting your business (campaigns, advertising, events, etc.).

Spend Wisely

Knowing how much you have to spend on marketing is critical as is knowing how you plan to spend it.

This means having a plan.  Your small business marketing budget should be a component of your marketing action plan, projecting the costs over the year so that you can factor this into cash flow forecasts and demonstrate overall how you are going to achieve your marketing goals.

Once you have developed your marketing plan and budget, it should not be fixed or inflexible. There may be times when you need to throw in some unplanned activity, at the end of the day, knowing whether the spend is helping you achieve your marketing goals is more important than sticking to a budget.


CMO Spend Survey 2015Two-Thirds of Marketers Say Their Marketing Budget Will Increase in 2016


Research from Gartner (2015 – 2016) over 300 UK and US businesses clearly demonstrates how marketing is increasingly linked to revenue as marketers face greater pressure to justify ROI. Partly because of this, alignment between sales and marketing departments is increasingly converging as marketers face increasingly strategic roles.

Digital promotion is increasingly important with both B2B and B2C marketers dedicating nearly the same spend on digital promotion, despite B2B companies typically having fewer customers than B2C companies. Digital marketing is now highly ranked with 20 percent of marketers saying digital spend is their highest priority, compared to 10 percent last year.

With increased economic confidence comes growing expectations. For this reason, perhaps it seems that marketing budgets are continuing to grow with the majority claiming to budget 11% of revenue on marketing budget this year which is up from 10% in 2014. Bear in mind though this is based across multiple sectors with a variety in business size which probably indicated our sentiments above are a little low.

While a key focus area seems to be customer experience this year, innovation also increasing in importance, with 71% of marketers now creating an Innovation Budget, averaging 10% of overall spend.

This brilliant infographic helps pull all of this into perspective and hopefully provides some comfort when you design your marketing budget this new year.

Questions? Please get in touch with Nicky Matthews – Dip M MCIM

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