There is no one answer for every company when it comes to figuring out how much you should spend on marketing. However, for our clients, I like to identify a few things before posing an answer to this question:
- How long have you been in business?
- Is your business financially healthy (gross and net)?
- How much money do you have saved?
- How competitive is your market?
These questions usually help me understand the situation a little better. If you haven’t been in business for long, you need to determine how fast you want to grow. Do you want to grow fast? 15% of your gross sales is an aggressive budget for marketing that can get you on your local business radar quickly. If you’re established, but still want to grow aggressively, a healthy budget should be 8 – 12% of your revenue. A modest budget for an established business would be between 6 – 8%.
Keep in mind that all of this is based on the principle that you’re tracking the success of your marketing, and maintaining effective marketing strategies that give you a steady return.