3 min read

How Much Should Your Business Spend on Marketing?

As a small business owner, you recognize the significance of marketing in fueling the growth of your business and attracting customers. However, determining the appropriate allocation of your budget for marketing can present a unique challenge.

Derik Savage peeking over the shoulder of a confused man

In this article, we aim to provide you with valuable insights and practical guidance to navigate this decision-making process. By understanding key considerations and best practices, you can make informed decisions that optimize your marketing budget and maximize its impact on your business.


We will explore various factors that should influence your budget allocation, including your business goals, target audience, industry landscape, competitive analysis, and available resources. By aligning your marketing budget with these factors, you can create a strategic and effective plan that addresses your specific needs and objectives.

We will also discuss industry benchmarks and case studies to provide you with a broader perspective on typical marketing budget allocations for businesses similar to yours. However, we emphasize that these benchmarks serve as reference points and should be adapted to your unique circumstances and goals.

Our goal is to empower you to tailor your marketing budget to your specific circumstances and leverage it as a powerful tool for growth and success.

Why You Need a Marketing Budget

Unlocking success in the competitive business landscape requires a well-defined marketing budget. Did you know that small businesses with a clear budget are 42% more likely to achieve growth objectives?

A strategic marketing budget empowers you to prioritize projects, allocate funds wisely, and track progress towards your goals. It provides the foundation for calculating ROI and evaluating the effectiveness of your marketing initiatives. With data-driven insights, you can make informed decisions that propel your business forward.

Inside a Typical Marketing Budget

Marketing is a vital component of resource allocation, occupying a substantial position in a company's overall budget. On average, industry surveys reveal that marketing accounts for approximately 13.6% of the total budget. However, this percentage varies depending on factors like industry type, company size, and growth stage. While it serves as a useful benchmark, it is crucial to customize it to individual circumstances, particularly for small businesses aiming for effective marketing expenditure planning.

The advent of social media and resulting emerging platforms has revolutionized the marketing landscape, offering businesses innovative tools and strategies. Unlike traditional advertising, digital platforms provide more cost-effective options, leveling the playing field for businesses of all sizes. For instance, by utilizing social media, companies can create engaging content, directly connect with their audience, and enhance brand awareness, all while maintaining cost efficiency.

Marketing Budget as a Percentage of Revenue

Determining the ideal marketing budget as a percentage of revenue is a crucial consideration. On average, businesses allocate around 8.7% of their total revenue to marketing. However, the percentage can vary based on your industry and specific business circumstances. To provide some insights, let's explore the marketing budget percentages by industry: 

  • Healthcare: 18% of company revenue.
  • Manufacturing: 13% of company revenue.
  • Mining and Construction: 3% of company revenue.
  • Retail Wholesale: 14% of company revenue.
  • Service Consulting: 21% of company revenue.
  • Technology: 21% of company revenue.
  • Transportation: 6% of company revenue.
  • Banking, Finance, Insurance, and Real Estate: 8% of company revenue.
  • Communications Media: 10% of company revenue.
  • Consumer Packaged Goods: 9% of company revenue.
  • Consumer Services: 6% of company revenue.
  • Education: 3% of company revenue.
  • Energy: 1% of company revenue.

Industry benchmarks offer valuable insights, it is essential to consider the specific goals of your business, the competitive landscape, and the dynamics of your target market when determining your marketing budget. Relying solely on percentages may not align with your unique circumstances and objectives.

Your business goals should be at the forefront of your decision-making process. Consider what you aim to achieve through marketing efforts, whether it's increasing brand awareness, driving sales, expanding market share, or fostering customer loyalty. Each goal may require different levels of investment and strategies.

Additionally, analyzing your competition is crucial. Understand what marketing tactics they employ, their positioning in the market, and the level of investment they allocate to marketing. This information can help you gauge the competitive landscape and determine how much resources you need to allocate to effectively compete.

Market dynamics also play a significant role. Factors such as consumer behavior, industry trends, technological advancements, and economic conditions can impact the effectiveness of your marketing campaigns. Stay informed about the latest market developments and adjust your budget accordingly to capitalize on emerging opportunities or mitigate potential risks.

Final Thoughts...

As a small business owner, determining your marketing budget requires careful consideration and strategic planning. By understanding the significance of having a marketing budget, analyzing industry benchmarks, and aligning your budget with your business goals, you can make informed decisions that maximize the impact of your marketing efforts.

Remember, the marketing landscape is evolving, with a shift towards digital channels and cost-effective platforms. Leverage social media platforms like Facebook, YouTube, and TikTok to reach and engage with your target audience effectively. 

While industry benchmarks provide useful insights, it's essential to adapt them to your specific business circumstances and objectives. Keep a close eye on your marketing performance, track ROI, and make adjustments as necessary to optimize your budget allocation.

By taking a strategic approach to your marketing budget, you can position your small business for growth, outshine your competitors, and achieve success in your industry. Remember that every dollar invested in marketing is an investment in the future of your business.

So, embrace the power of a well-defined marketing budget, explore new marketing channels, and make data-driven decisions to propel your small business forward. With careful planning and execution, your marketing budget can be the catalyst for driving growth and achieving your business goals.

Once you have figured out your budget to marketing your business you’ll next want to figure out how to get the most out of all your marketing dollars. For some tips check out our article 5 Expert Tips for Making the Most Out of Your Marketing Budget.




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