Based on the information they provided, they recommended between 2-5% of projected gross sales. But depending on the size of your business, your industry, and your growth stage you may want to plan on more. For example, a retail business in the early years may need to allocate up to 20% of gross projected sales while getting started.
They also suggested the following:
“As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between:
1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and
2) the costs of promoting your business (campaigns, advertising, events, etc.).”
So, based on these assumptions from the SBA, let’s break this down a little more, shall we?
Type of Business / Projected Revenue
% of Revenue For Marketing
Small Business with less than $5 Million in revenue
Small to Mid-size Business between $5-10 Million in revenue
Mid-Large Companies between $10-100M in revenue
How does look in terms of dollars invested in marketing? Here are a few examples.
Projected Yearly Revenue
Approximate Yearly Marketing Budget
$16,000 a year
$70-80K a year
$300K & $350K a year
$1 million & $1.2 million a year
and so on
Now the questions are::
How does one determine how to spend the money wisely?
How much should be earmarked for your online marketing budget vs traditional marketing efforts?
The answers to these questions are simple, it depends on a lot of factors, many we have already discussed above. But you have to look at where you are currently, where you want to be, and in what period of time.
You will need to spend this budget on things like:
Content, blogging, video, etc
Marketing technologies and analytics
Paid advertising (PPC, paid social, etc)
and much more
Depending on your situation, you should plan a minimum of 25-50% of your budget to go toward your digital marketing efforts, and in some cases even more. The best part about digital and inbound marketing, when done properly, is that you can be dang near 100% accountable for your growth, and measure your success.
At the end of the day, the ideas here are an approximation, and can and will change depending on your business and the markets you serve.
Owner/Head Coach @ Bernco Media. Digital sales & marketing since 1997. Passion for teaching companies to be the most trusted voice in their space. They Ask, You Answer Certified Coach & HubSpot Certified Partner & Trainer. Reversed Type 2 Diabetes doing KETO. Wears Mickey Mouse Daily. Daydreaming of next Disneyland Trip.