How To Establish A Marketing Budget

Your marketing budget needs to fit your business goals and provide a high return on investment.

Marketing is essential to profitability and growth, yet many businesses don’t allocate enough money or lack systems to track results to improve performance.

But how much money should you spend on marketing? And how can you spend it wisely?

Allocate Enough Money

Create a marketing budget by allocating a percentage of actual or projected gross revenues – usually a minimum of 5 percent for start-up marketing. The percentage is further influenced by the businesses growth stage, sales cycle and cash flow.


For example, SolarCity spent 17.5 and 43 percent of gross revenue on marketing expenses, first six months of 2012 & 2011 respectively.

2012 6 months Sales $71,415,000, Marketing $12,500,000 (17.5%), Loss $48,911,000.
2011 Sales $20,278,000, Marketing $8,700,000 (43%), Loss $35,463,000.
SEC Form S-1

Rule Of Thumb

As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.). Source:

This percentage also assumes you have profit margins in the range of 10-12 percent after you’ve covered your other expenses, including marketing. New customer profit margins may be lower if your business offers additional products and services to upsell.

Track Results To Improve Performance

Marketing without measuring results throughout the Marketing/Sales Funnel is like running a business without a bookkeeping system.

Our Complete Business Development Package provides a turn-key solution to grow your business.  It includes a website and marketing campaign to generate exclusive leads.  Leads reside in a CRM you can use to review lead sources based on prospects sold.  Coaching available to help improve overall results.

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