How Much Should My Business Spend for an Effective Marketing Plan?

As a business owner or leader, it’s important to have a good grasp on your marketing — not just what you’re doing and whether it’s working, but also how much you’re spending and if it’s the right amount. You don’t have to be in it all the time; that’s better left to an internal or external marketing team. Awareness, however, is key. 

Many businesses are either spending way too much or not quite enough when it comes to their marketing, and that’s not good for business. Whatever you’re doing with your marketing dollars, you want to make sure that you’re spending the right amount, so you can gain traction and get results. 

Getting an Effective Marketing Plan in Place

A lot of marketing companies will take your money and not question where it’s going or try to change things up for your business if what’s currently being done isn’t working. Don’t fall into this trap! 

Marketing is an investment. When done right, it can seriously benefit your business, increasing your bottom line in ways you haven’t seen before. However, marketing is also trial and error. So before you throw your marketing dollars away, make sure there’s a strategy in place and a team behind it that’s willing to pivot if things don’t go as planned.

Along the same lines, your business is unique, and your marketing strategy should be, too. What works for one business may not work for another. While it’s not necessarily fun to hear, this is important for your team to remember. 

Just because you know someone who’s doing big TV commercials and social media ads that are performing well doesn’t mean the same will be true for your business. It’s all a matter of what works for your business, so it’s best to keep an open mind as you delve into marketing. 

Step 1: Start in the Right Place

A lot of businesses want to revamp their marketing, but they get fired up and start in the wrong place. For instance, they’re worried about ad spend when they haven’t even gotten the fundamentals down!

We mention it all the time, but in case you’ve ever missed it or simply need a reminder, the fundamentals are:

• One-liner
• Website
• Lead-generator
• Nurture campaign (generally, emails that come post lead-generator)
• Sales campaign (this comes after the lead-generator and can be done via email, call, or text)

If we get those things right first, it makes all the other marketing things better. So before you worry about how much you should be putting toward ad spend or any other type of marketing service, you have to get back to the basics — and it all begins with your messaging. Otherwise, whatever you do with paid ads, search engine optimization, or any other marketing service is going to be a waste.

At Business Builders, we follow three steps:

1. We plan things (strategy).
2. We produce them (creation).
3. We promote them (marketing).

By doing it in that order and in that structure, you can avoid wasting a ton of time and money on things that don't work, and that’s why we do it. 

Step 2: Spend the Right Amount of Money

As a general rule, businesses that are under five years will spend somewhere between 12-20% of their annual budget on marketing-related services. 

Businesses that are more established, ones that have been going for over five years, are more likely to be in the 6-12% range.

On average, though, you should spend about 12% of your total budget on marketing.

So, for example, if you're spending a million dollars a year in total company expenses, then about $120,000 should be set aside for marketing services.

A note of caution, though: If you have a marketing team member in-house, they shouldn’t have to do it all. And in many cases, they can’t — at least, not as well as you need them to.

Don’t get us wrong, it is a benefit and an asset to your business to have someone who is responsible for your marketing; however, a lot of business leaders think they can hire a marketing person and have them be a unicorn and do all the things. But here’s the thing… someone can't be an amazing copywriter, an amazing ad strategist, an amazing designer, an amazing website coder, and so on and so forth. 

Nobody can do all those things really well as one person, and that’s why it can be a huge help to bring on a marketing agency. Your marketing can be led by your in-house team member, but it can be heavily executed — to the highest level — by a team of industry experts. And that is where you’re going to see a real impact. 

Step 3: Give It Some Time

So many businesses think that they’re going to results right away when they decide to do their marketing “right.” That would be awesome, but that’s just not how it works!

Most marketing takes a little bit of time to get going, and different kinds of marketing do different things. For example, social media posting may be used for brand exposure, whereas ads and landing pages may be used for conversion and getting leads. This is why a marketing strategy is so important! A marketing professional can help you get one in place. 

At Business Builders, our job is to help other people grow their businesses, not just make them look pretty in public. But growth isn’t always that clear, so you need some way of tracking it. If you’re not tracking your marketing right now, it’s time to find a CRM and get started!

We love HubSpot because it’s an all-in-one business platform that offers tools for marketing, sales, and customer service. It’s one of the best ways to track what you’re doing as you grow your business. 

Amp up Your Marketing & Grow Your Business!

If you know you need to start taking your marketing seriously, we encourage you to take the leap and get started. You don’t have to start big. Start small! And then work your way up from there. Begin with your messaging and build on it. 

We understand how overwhelming marketing can be, especially if you’re a small- or medium-sized business. The good news is that marketing can work for your business, and our team would be honored to help make it happen.

Reach out to us today to get started.