Posted on May 3, 2022 | Category SMB Marketing | Length 2:51

Video Transcript

Creating budgets, let alone, a marketing budget can feel as elusive or downright mythical as Bigfoot. And if you’re like most businesses, you’re already busy doing business-y stuff and don’t have time to do hours of research just to create a basic marketing budget.

So, to, hopefully, save you hours of research and questions, here’s a basic overview of how to create an annual marketing budget.

[marketing budgets typically range between 5 and 25% of a company’s current or target annual revenue.] And a straightforward way of determining your ideal marketing budget is to use The Growth Mode technique.

There are three modes: Maintenance, Controlled Growth, & Accelerated Growth.

Depending on what mode your company is in will help determine what your percentage should be. For maintaining your current status, 5-10% is standard. For controlled growth periods it’s 10-15%, and for accelerated growth 15-25% is recommended.

Here are some example to show how this works.

For a company in Maintenance Mode with a annual revenue of $240,000, the marketing budget would be $12,000 at 5%. Making the monthly marketing budget $1,000.

For a company in a Controlled Growth Mode with a annual revenue target of $600,000, the marketing budget would be $60,000 at 10%. Making the monthly marketing budget $5,000.

For a company in an Accelerated Growth Mode with a annual revenue target of $1,000,000, the marketing budget would be $150,000 at 15%. Making the monthly marketing budget $12,500.

And finally, for businesses just starting out, or with an annual revenue of $120,000 or less, the minimum recommended marketing budget is $6,000. Or $500 per month.

[Simply put, use your current or target annual revenue and multiply that by your growth mode percentage. The resulting number will be your annual marketing spend. Then you can break it down into monthly or even quarterly spend.]

Okay, okay, that’s a lot of numbers. But now you have a solid and straightforward way to calculate a basic marketing budget. And if you’re hungry for even more detailed information about marketing budgets I’ved included a link to the full blog post about this topic where I dive deeper into topics like industry standards, ROIs, and strategies.

Otherwise, drop your questions in the comments. Oh, and if you liked this video make sure to hit that like button! I’m Sarah from Third Angle, thanks for watching.

Want to learn more? Awesome! Check out my video What is Marketing Vs. Advertising. Oh, and if you like this kind of content then make sure to subscribe so you never miss a thing.

Sarah Perry

As the official nerd at Third Angle, Sarah specializes in creating and managing clients' online marketing services. With a background in graphic design and website development, she can help you determine how to best present your business while playing nice in today's world wide web.
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