How Much Should You Spend on Marketing designed by fivenson studios ann arbor michigan graphic and wed design company

Small business owners begin with a hefty startup investment just to get off the ground. The last thing you want to think about is more spending. But the old adage that “it takes money to make money” holds some truth, especially for young companies. In order to ensure your success, you’ll need to assess what expenses to build into your budget.

Begin by considering the expense question from two angles:

  1. What business spending is necessary for my operation’s success?
  2. What investments will produce a return for my company?

The first question is one of fixed costs. You’ve likely already evaluated the labor, equipment and location spending your company needs to operate. Next, weigh the investments that will bring the most return—such as marketing.

“Whether you run a small business or a multimillion-dollar corporation, marketing is essential to your profitability and growth,” says the U.S. Small Business Administration (SBA). In general, the SBA recommends small businesses with under $5 million in revenue allocate 7% to 8% to marketing. Depending on your business goals (fast growth vs. slow growth) and the size of your target market, you may need to adjust your marketing budget up or down. But the SBA’s recommendation—for instance, $75,000 in marketing for a business with $1 million in revenue—provides a starting point from which you can evaluate this important investment.

We would love to hear your thoughts?

Fivenson Studios is based in Ann Arbor, Michigan, our graphic design team specializes in logo and webpage design, as well as marketing campaigns for social and print media. From flyers and brochures to targeted landing pages, we aim to bring your company into the spotlight and reach a greater range of potential customers.

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