Planning and projecting marketing costs can be a daunting task for many small business owners. How much should I spend on advertising? Should I create a website? What tools will I need to purchase to manage social media accounts? What about content creation? Should I spend money on events and sponsorships? 

All of these are valid questions and are at the center of identifying what marketing operations mix is best suited for your organization and customers. As you might have guessed, there is no set of marketing activities that will guarantee immediate success but understanding the needs, values, and buying journeys of your ideal customers or buyer personas, will help your business prioritize activities.

The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin – after all expenses – is in the 10 percent to 12 percent range.

 

Start-ups and small businesses usually allocate only  2  to 3 percent of revenue for marketing and advertising. Still, other marketing experts suggest a wide range between 1 and 10 percent or more depending on how long you’ve been in business and how competitive your market is (Schwinum, 2021).

Let’s take a closer look at how to start creating your business marketing budget, what costs to consider, and some helpful resources and templates to get you started. 

How To Create a Marketing Budget

1. Have a Detailed Marketing Plan

Outline a detailed plan of what your organization’s marketing strategies will be, how you’ll accomplish them, and how they tie back to your overall business goals. Understanding your customers will play a huge factor in planning your marketing efforts as you’ll avoid allocating dollars to tactics that do not align with how your customers interact with your brand. 

For Example: Allocating resources to improve content and engagement on Facebook when you know your customers mostly follow your brand on Instagram.

2. Spend Wisely and Be Aware of Hidden or Unforeseen Costs

As a small business marketing strategies need to be planned in detail while understanding certain limitations. If you need to purchase software or a specific tool make sure it will be a true investment for your organization. To minimize costs, use free trials for any tools or sign-up for free versions. This will give you a chance to understand if a tool will really help your business in the way you thought it would. Lastly, always reserve a certain percentage of your marketing budget for unforeseen costs. It is best to have a contingency fund and use it if needed than to have to discontinue a promotion due to having insufficient funds.

3. Track costs, ROI, and Adjust Accordingly

To manage a successful organization you need to track costs and understand how these investments are growing your business. Compare dollars invested in an event for instance and how many individuals attended. Did you create new customers through this strategy? How much of a return on investment are you seeing? As you gather more experience through multiple types of marketing efforts you will be able to adjust your tactics accordingly to increase or discontinue funding certain operations.

Typical Marketing Expenses 

To execute an online or even offline marketing campaign, organizations need a wide mix of tools and services to support them in their quest. Below is a list of common marketing costs and examples to consider. 

• Software/Tools

• • Website – WordPress, Hubspot, Hosting Services, HotJar, Optimizely.
  • Social Media – Hootsuite, Hubspot, LinkTree.
  • Email/ CRM – MailChimp, Zendesk, Hubspot, Sender, Omnisend.
  • Analytics/ Insights – Google Analytics, Oribi, Abode Analytics, GoogleAds.

• Content Creation 

  • Abobe Suite, Canva, video/photography equipment, or video/photography vendor.

• Advertising & Promotions

  • Offline – Referral discounts and promotions
  • Online – Sponsored/Paid Ads

• Branding

• • Design/creative support, print signage, promotional swag, in-store branding, direct mail branding. 

• Events

  • Venues, public speakers, musicians, partnership fees.
    

Many of these tools and services offer free versions. Do not sign up for a tool a begin paying for the highest subscription level. First, test out the tool by using the free version, and then upgrade the service if your organization can truly leverage it. 

Remember prioritizing some of these costs can be difficult. Stick to your marketing plan and find ways to reduce costs.

Budgets Templates and Resources 

After identifying some of the expenses your organization will need to incur to execute its annual marketing and sales plan, you will need to document it in a format that is readily accessible and easily trackable. 

There is no need to create complicated excel sheets to track your marketing expenses. Consider utilizing some of the free budgeting templates available on Hubspot’s blog. Here’s a list of the various templates available for free.

• Generic Master Marketing Template
• Product Budget Template
• Content Budget Template
• Branding & Creative Budget Template
• Website Budget Template

Sample Marketing Budget 

                                                                                                                                                   Hubspot Blog –How to Manage Your Entire Marketing Budget [Free Budget Planner Templates]

Now, you should have all the tools to go on and plan your organization’s marketing budget in detail. Remember to only prioritize costs, tools, and services that directly align with your marketing plans for the year. 

References

Conley, M. (n.d) How to Manage Your Entire Marketing Budget [Free Budget Planner Templates]. Hubspot Blog.https://blog.hubspot.com/marketing/how-to-manage-marketing -budget-free-budget-templates

Schwinum, H. (2021) The Start-up Dilemma – How Much to Spend on Sales & Marketing. Vendux Blog.https://www.vendux.org/blog/the-start-up-dilemma-how-much-to-spend-on-sales-and-marketing