Contents

• How much do small businesses typically spend on marketing?

• How to set an effective marketing budget for your small business

How much do small businesses typically spend on marketing?

Many small businesses allocate between 2% and 5% of their total revenue to marketing activities.

Over the past year, specialists have noted a 10.4% increase in marketing investments—double the growth of the previous year. The U.S. Small Business Association highlights that B2C companies tend to invest more in promotion than B2B companies.

How to set an effective marketing budget for your small business

Every business must invest in marketing to attract and convert customers, which inevitably incurs costs. Using an indiscriminate approach to reach as many users as possible is not a good idea. Defining a marketing budget can make a significant difference, helping you focus your investments and optimize your efforts. The key is understanding how to create a marketing budget and stick to it to achieve satisfactory results.

Here are some tips:

General overview

Knowing where your small business stands can help you make critical decisions. Your business will likely fall into one of two categories: a startup or an operational business. The category your business belongs to will significantly impact your marketing budget. Generally, startups incur higher marketing expenses than operational businesses.

Analyze your sales channels

Creating an appropriate marketing budget requires understanding your sales channels. Gathering data from your CRM simplifies this process:

• How many monthly visits does your website receive?

• How many leads do you generate per month?

• How many leads qualify as potential customers?

• What is the cost of generating these leads?

• How many leads turn into opportunities?

• How many opportunities close as new deals?

Analyze your operating costs

Create a spreadsheet listing all your current or projected operating costs. These may include web hosting, sales taxes, professional fees, content creation expenses, and more. These elements will give you a realistic idea of the amount you can allocate to your marketing budget.

Set your marketing budget based on goals

Answer these questions to determine how your marketing budget aligns with your objectives:

• What are your business goals for the quarter, year, and next three years?

• How much revenue do you need?

• How many leads does your sales team need, based on their close rates, to generate enough revenue to meet your goals?

• Determine the number of leads required to achieve the desired number of sales. What percentage of your leads typically convert? If you’re just starting, research the average conversion rates in your niche to set realistic goals.

Never base your budget solely on what remains after covering other expenses.

Study the competition

Understanding your niche is critical when setting a marketing budget for a small business. Research your competitors and analyze their marketing campaigns:

• Who are the key players in your industry?

• What methods do they use for advertising?

• Are they solely using digital media in their marketing strategies?

• Are they investing in multichannel campaigns or focusing on a few selected activities?

Treat marketing as an investment, not an expense

Marketing budgets in large corporations are often determined by executives who view marketing teams as a cost, and the budget is perceived as an expense. Instead, your marketing budget should be considered an investment—one that delivers measurable and verifiable returns over time.

Understand current and future trends

Keeping up with current and future marketing trends can help guide your budgeting process. When setting a marketing budget, adopting and applying new technologies is essential to stay ahead of industry changes.
With an effective marketing budget and strategy, you can leverage basic yet powerful tools, such as email marketing and squeeze pages, to achieve measurable results. The key is to focus on your audience, the best communication methods, and the most suitable message for your target market.

For Bplus, doing more with less is a true skill. The challenge lies in making the business stand out, driving traffic, and fostering loyalty.

Wondering how to do it? We’re here to help.