Having a marketing budget is crucial for every business, big or small. Effective marketing can take a small business to the next level and it can help convert first-time customers into repeat customers. No matter how big or small your business, you should have money set aside to practice marketing. The question is, “how to set a marketing budget for your business?” How do you determine what your marketing budget should be? This blog post will help you decide how to set a budget for your specific business.

Setting Your Marketing Budget

There are a few factors that will lead you to the exact amount of money you should put aside for marketing. You will want to look at the stage and industry that your business is in. Below, we discuss how to set your marketing budget based on those two factors.

What Stage is Your Business in?

If your business is in a growth stage and your goal is to build awareness, then you will want to put a little more into your marketing budget. The United States Small Business Administration (SBA) recommends that growing start-ups should spend 3% to 5% of their gross revenue on marketing. They also recommend that businesses with under $5 million in gross revenue should spend 7% to 8% on their marketing.

set your marketing budget based on percentageOn the other hand, if you have a well-established business, you do not have to spend quite as much on marketing. The SBA says these businesses only have to spend 2% to 3% of their gross revenue. You are not limited to that small percentage though. As long as you are seeing a return on your marketing investment, feel free to increase your marketing budget if you have the margin to do so.

At the end of the day, you want to spend enough money to see results. You want to make sure you’re getting a return for your investment. If you ever see that your marketing efforts are proving to be unsuccessful, we recommend changing your method or readjusting your budget.

What Industry is Your Business in?

Different industries will need to put different amounts of money on their marketing budget. For example, car dealerships will likely not have to spend as much on their marketing because they make much more out of each sale. Retail stores, on the other hand, need to spend a large portion of their revenue on marketing to drive their sales. The SBA reports that new retail stores typically spend up to 20% of their gross sales on marketing. When setting your marketing budget, look at the products or services you offer and how much you make on average per sale. Usually, the more you make in sales, the less money you have to spend on marketing.

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Where to Spend Your Marketing Budget

Once you have decided on your business’ marketing budget, you need to figure out where to spend the money. There are many different types of marketing, so it can be confusing trying to figure out where you will get the best bang for your buck. Here are some ways you can invest your marketing dollars:

Online Marketing

online marketing budget for digital marketing

Online marketing is an umbrella term that refers to anything from SEO, email marketing, to social media marketing. This is a more popular form of marketing than it used to be as we are becoming more technologically advanced each day. The marketing world is starting to turn away from outbound marketing (commonly referred to as Old Age marketing). As a result, you may not want to spend a large percentage of your marketing budget on newspaper advertisements and mailers. Of course, your business could be the exception to this rule.

Inbound (New Age) marketing is seen as the most prevalent type of marketing in today’s world. Most online marketing tactics fall under inbound marketing, which is why it should be practiced. We recommend spending at least half of your marketing budget on online marketing as it is very effective. And we aren’t alone in this recommendation. An article by Hook Agency stated that 50% of a marketing budget should be spent on online marketing and the percentage should increase to 55% by 2020.

Hiring a Marketing Agency

If you have never practiced marketing and you are unsure about where to start, hiring a marketing agency may be in your best interest. An experienced marketing agency can help you be successful with your marketing strategy. Additionally, they can help with implementation. This will cost more money than if you were to do it yourself, but you are much more likely to see positive and quick results. Marketing agencies also tend to offer more services, like content management and search engine optimization. For these reasons, it can be a great investment to hire an agency.

Other Forms of Marketing

We recommend you browse the rest of our blog, to become more effective as an online marketer. We go more in depth and cover other forms of marketing you can invest your marketing budget on. If you would like some additional information on marketing channels, please browse the rest of the blog.

We will answer any of the questions you may have about marketing budgets and help you get started on your business’ marketing. You can contact us by filling out the form below.



Joshua Lyons Marketing, LLC was established in 2015. Since that time we have provided digital marketing services to business and professionals. We help our clients increase their online exposure as a means to increase sales and revenue. Our core services include search engine optimization (SEO), website development and content creation. We also provide other online marketing services, such as email marketing, marketing consultations and various types of advertising. Our team is based in the Milton, Pace and Pensacola, Florida area. However, we work with clients throughout the United States. Read More


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