As a small or medium business (SMB), knowing how to allocate your marketing budget is crucial for growth and success. Your marketing budget helps you connect with customers, promote your products or services, and build your brand.

This article will guide you through the process of setting an effective budget from advertising to maintaining and improving your website. Let’s break it down in simple terms.

Why Marketing Matters

Marketing helps people learn about your business, what you offer, and why they should choose you over the competition. It is an essential investment for reaching new customers and keeping existing ones. Without it, even the best products and services can go unnoticed.

Marketing can include various activities such as social media advertising, email marketing, content creation, and more. The right marketing strategies can significantly increase your visibility and sales.

Understanding Marketing Budget Basics

The first step in creating your marketing budget is understanding that it should be based on a percentage of your revenue. Here’s a simple breakdown:

• B2B (Business-to-Business):
  Spend 2% to 5% of your annual revenue on marketing.
  
  
• B2C (Business-to-Consumer):
  Spend 5% to 10% of your annual revenue on marketing.

Example:

• If your B2B company has an annual revenue of $400,000, you'd budget:
  • 2%: $8,000
  • 5%: $20,000
    
    
• If your B2C company has the same revenue of $400,000, you'd budget:
  • 5%: $20,000
  • 10%: $40,000

This way, you ensure that your marketing efforts are properly funded to help you attract and retain customers.

Budgeting for Your Website

Your website is often the first impression and point of contact potential customers have of your business. It needs to look good, work well, and stay secure.

Here’s how to budget for your website:

Website Maintenance & Security:

Plan to spend at least 10% of the original cost to build your website each year for maintenance and security updates. This keeps it running securely and smoothly.

Example:

• If your website cost $15,000 to create, you should budget at least $1,500 each year for maintenance.
• This includes updates to ensure your site is secure, running smoothly, and compliant with any new regulations.

Improvements & Additions:

If you plan to enhance your website, add new features, or improve the design (like adding a blog, e-commerce capabilities, or new features) you'll need to budget more than just the maintenance cost. The amount will depend on what you want to add.

Example:

• If you want to add a new online booking system costing $3,000, you should include that in your budget along with your maintenance costs. 
• So, for the year, you’d budget $1,500 for maintenance and $3,000 for the new feature, totaling $4,500 for your website.

Putting It All Together

When setting your annual marketing budget, make sure to include both your overall marketing expenses and your website budget. Here’s a straightforward formula:

1. Calculate your total marketing budget based on your revenue.
2. Determine your website budget by setting aside 10% of the original cost for maintenance, plus additional funds for any planned improvements.
3. Combine the two to create a comprehensive marketing budget that supports all aspects of your business.

Real-World Examples

• Local Coffee Shop (B2C)
  • Annual Revenue: $300,000
  • Marketing Budget: $15,000 to $30,000 (5% to 10%)
  • Original Website Cost: $5,000
  • Annual Website Maintenance: $500 (10% of original cost)
  • Planned Improvements: New online ordering system costing $2,000
    

• Tech Consulting Firm (B2B)
  • Annual Revenue: $1,000,000
  • Marketing Budget: $20,000 to $50,000 (2% to 5%)
  • Original Website Cost: $20,000
  • Annual Website Maintenance: $2,000 (10% of original cost)
  • Planned Improvements: Adding a blog and resource center costing $3,000

Final Thoughts

Creating a well-planned marketing budget is vital for the growth of your SMB. By understanding how to allocate funds for both general marketing and your website, you can ensure that your business is equipped to attract and retain customers effectively.

If you need assistance in setting your marketing budget or improving your website, our boutique specializes in helping SMBs like yours. We’re here to support your journey to success!