small business budgets explained nimbusmark

Small Business Advertising Budgets Explained

We know that marketing has a direct impact on the profitability of your small business. Still, many small businesses fail to channel enough money into a considered small business advertising strategy that has clearly defined outcomes.

We explore ways on how to determine your advertising spend and generate meaningful results.

The SBA Guide to Budgeting

As noted by the Small Business Administration (SBA) [1], budgeting plays a critical role in your organization’s future. Your budget will help you to identify key variables that might impact your profitability, allowing you to create additional brand value and strive toward reaching your core goals and objectives.

It is important that your budget is closely aligned with your business’s strategic goals and can help you overcome any obstacles that are preventing you from maximizing the outcomes from your investment.

How to Determine Your Advertising Spending

If you aren’t sure how to determine an accurate or realistic advertising budget, here are some points to keep in mind.

Before you can even think about putting together a marketing budget, it’s helpful to know which channels you need to reach your target audience. In addition to understanding the age group you are targeting, it will be beneficial to identify their income level, geographical location, and the types of brands they already interact with frequently. This information will help you decide how best to guide your audience through your sales funnel.

Although many businesses opt to channel a percentage of their revenue into their marketing strategy, the amount of money you allocate should consider several factors. These include the industry you operate within, your operation’s capacity, whether you need to make an impact almost immediately, and how much growth your business can comfortably manage. For example, in the first couple of years, new businesses might invest up to 20% of sales revenue in their marketing efforts to effectively establish themselves as a leading figure within their niche.

We know that you’re looking for percentages here. Although there are no hard and fast rules, it is generally expected that businesses generating less than $5 million in revenue per year should spend between 7% and 8% of that revenue on their marketing efforts. This only applies if you are securing 10% to 12% revenue margins after expenses. If your revenue margins are lower than 10%, you might find it more beneficial to increase your marketing spending.

How to Maximize the Value of Your Small Business Advertising Spending

Of course, setting your budget is just one element of your marketing strategy. It is also important to ensure you are investing every cent of it wisely and in a way that will contribute positively to the overall outcomes you want to secure.

If you are eager to explore the potential of your small business marketing strategy and want to ensure you are investing enough money to generate meaningful results, organize a personal consultation with us today to find out more about what NimbusMark services and products can do for you.



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