Impact Group Marketing Blog


How Much Should My Business Spend on Advertising and Marketing?

When it comes to growing your small business, adding new clients consistently is a top priority. But how much should you spend to attract these new clients and increase sales?

How much should you spend on advertising and marketing?

The U.S. Small Business Administration (SBA) has suggested that “small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing.”

Using the SBA percentage, if your net profit is $500,000, you should spend $40,000 on advertising and marketing.

How much should you spend based on the age of your business?

First Year Business – 25-35%

The first year will be the most challenging, so you need more marketing capital to get noticed. Think of marketing as an investment in your business.

Established and Growing Business – 12-18%

After 2-10 years, your name is out there, and your business is growing. Take advantage of the momentum and more of the market.

Well Established Business – 3-5%

After 10+ years, you have a well-established name and reputation. Now is the time to keep up-and-coming businesses from closing in on you.

What channels should you focus on?

When it comes to advertising and marketing, there are many channels you can choose from. So, which channels should you focus on? Ultimately, your marketing budget should go to the channels that help you reach your goals. What do you want to achieve this year? Revenue growth? Brand recognition? Growth of your email list?

Here are the most popular digital marketing channels to help small businesses reach those goals:

Website – This includes the initial website design and development, updates, and maintenance.

Read More: 10 Signs Your Business Needs a Website Redesign

Blogging – Blogs help you build trust with potential clients and provide an extra level of customer service for existing clients. Generating new content is also essential for SEO and social media.

PPC AdsThis digital marketing tool allows you to show your ads on search engine results pages (SERPs). You pay the search engine’s owner (Google, Bing, etc.) for the service and each ad click.

Social Media – When it comes to promoting your business, paid advertising on social media can have a significant impact. It allows local businesses to compete with larger companies and encourages a positive connection with your clients.

Geofencing – As a local small business, you need to focus on location-based technology that builds brand awareness.

E-newsletters – Sending regular updates to clients who opted to receive communication keeps your name at the forefront of their minds and encourages repeat business.

Read More: 5 Effective Marketing Strategies to Grow Your Small Business

While digital advertising is often more cost-effective, traditional advertising still has value depending on who you want to reach. Consider your resources and how you can maximize your advertising budget.

Read More: Is Traditional Marketing Still Effective in Today’s Digital World?

Bottom Line

How much should your business spend on advertising and marketing? Enough to successfully achieve your goals.

Marketing is an investment in the future growth of your business, so determine how much you can invest – and then invest wisely. Track everything and make adjustments as needed to achieve your goals.

If you’d like to know more about how Impact Group Marketing can help, contact us today for more information or a free quote. We’re focused on helping you make an impact in your industry – and we don’t believe in contracts, so we’ll work hard for your business every month!