When you are starting your business, your marketing needs and budget are very different from an established business. For established companies, the general guideline for a marketing budget is a percentage of sales.
When you’re starting out, you need to consider what marketing avenues you have identified in your business plan. You also need to determine which marketing methods will be most effective to reach your target audience. A marketing expert can certainly help with this.
A startup’s main concern is money. What can your business afford to spend on marketing from available startup working capital?
2% to 10% of sales is the average range for marketing and advertising expenses. This range can be higher or lower depending on your industry, your products or services, how long you’ve been in business, and other factors.
For startups, while you’re developing your brand and acquiring initial customers, your marketing budget is typically higher than a business that has an established customer base.
The Small Business Administration recommends companies spend 7 to 8 percent of their gross revenue for marketing if the business is doing less than $5 million a year in sales and the net profit margin – after all expenses – is in the 10 to 12 percent range.
For startups and small businesses, most marketing experts recommend allocating two to three percent of revenue for marketing. If you’re in a competitive industry, you should budget up to 20 percent of your revenue towards your marketing budget.
Hiring a small, local marketing firm will save you money in the long run and get your branded message out to your target audience at a reasonable cost. For help with your small business marketing, contact Blue Lilac Marketing Group.