How Much Should A Small Business Budget For Marketing?

. 7 min read
How Much Should A Small Business Budget For Marketing?

You really have to consider a large number of factors before starting your small business. However, the most important and vital task to consider for the growth of your company is marketing it properly. After all, how would consumers know that you existed if you did not get the word out?

There are several additional tasks inside the marketing bucket: Who am I going to target with my marketing? What market am I going to? What are the marketing objectives I would like to achieve? These two questions are critical for you, and they all lead to the same bigger question: What's my marketing budget?

For any company, determining the appropriate marketing budget is a difficult task. Startups and small businesses, in particular, must maintain a healthy revenue-to-cost ratio when investing capital in marketing and development.

Your marketing strategy both informs and directs your marketing budget. As a result, creating a marketing budget for a small company based on marketing tips is a crucial move. Without one, you risk overspending and jeopardising your overall marketing budget, or underspending and denying yourself the exposure you need to grow your company.

Let's see how a marketing budget is to be created. Here we will discuss the step-by-step process for business in India so you can build your own marketing budget plan. To aid you in getting started, we'll also provide you additional checkpoints for small business ideas and new business ideas.

Creation of marketing budget for small business

In order to expand, every small company should invest in marketing. But what amount should you invest in advertisements and in which media? These questions need to be answered as part of the creation of a marketing budget for small businesses in India. For new small businesses that have not previously developed a marketing budget, these questions can be difficult to answer.

Depending on your preferences, customer base, consumer segment, branding, and basic preference, you can define your marketing budget. There are, however, a few marketing tips that are generally accepted as the most effective in terms of time and money.

The steps below will assist new entrepreneurs and startup owners in creating a successful small business marketing budget.

Step 1: Define your marketing strategy

Before making your budget, develop a marketing plan. This is because it lets you figure out just how much money you will need to market your business the way you want. If you later discover that your perfect marketing strategy is out of your price range, so be it. Since marketing is a variable cost, it doesn't mean you won't be in a position later on, just because you can't afford to spend much now.

  • Objectives of the business

There are many parts of the marketing campaign. The first element is the objectives, which are the outcomes you desire from the marketing activities. Obviously, the ultimate aim of any marketing campaign is to improve sales, but you can strive to be more precise to develop the best approach. Marketing objectives may include increasing traffic to the website of the company or increasing social media posting engagement rates.

  • The targeted audience of the business

Your target audience is the group of people that you believe can be turned into paying customers as a result of your marketing efforts. To do so, you will need to conduct market research: Make a phone call to your current customers to find out what they like about your company. Gather demographic data and learn how people learn about your company across various channels to create the perfect marketing strategy.

  • Distribution Method

The networks by which you market your company are known as your distribution system. Previously, this was accomplished by television, radio, and print ads. Advertising online is now the most cost-effective choice for small businesses. You can advertise online in a variety of ways, from purchasing advertisements to investing in social media marketing and SEO.

  • Analytics

The objectives you set for your marketing campaign must be measurable. This is where data analytics can help. Any successful marketing tips make use of tools like Google Analytics and Facebook ad manager to monitor the success of its campaigns. You can see where your marketing campaigns work or fail and use analytics to make the required changes.

In a nutshell, the marketing plan determines what, why, and how you sell. It outlines your overall strategy and strategies for achieving your goals.

budget marketing written on green and blue folder on table with documents, pen and calculator

Step 2: Deciding the marketing budget for the first year of operations

Now that you know your plan, you can figure out how much it will cost you. While you will have to spend some money to assess your targets and define your target audience, your delivery method would account for a majority of the costs.

There are numerous marketing delivery strategies available, each with its own set of costs. Depending on the ad format, TV, radio, and print advertisements normally have a set price. The cost of an online ad varies depending on the type of ad, site, and frequency of the ad. Other marketing promotions, like Google ads or social media ads, may be achieved at a low cost. Most marketing campaigns can use a combination of marketing tips and strategies.

As previously stated, there is no hard-and-fast guideline for business in India on how much money a company can set aside for marketing. Your market, stage of the company, profit margins, and annual revenues all play a role. Take note of the following:

  • Many companies allocate a portion of their gross sales to marketing. The advantage of this strategy is that it allows your small business marketing budget to grow in tandem with your sales. Bear in mind, though, that marketing drives revenue, not the other way around. As a result, a startup company's marketing budget must be disproportionately large in comparison to its revenues.
  • Examine the revenue forecasts for your first year of operation to determine your marketing budget. Benchmark details on the average marketing expenditure of your industry can be found in industry bodies, trade groups, magazines, and blogs.

Step 3: Adapting the budget as per requirement

Once you have calculated your annual marketing budget, fine-tune it with your marketing plan. Be realistic: If your budget doesn't allow you to cover all of the aspects of your marketing strategy, look for ways to get more done with less. Can you, for example, run less paid ads and instead concentrate on free marketing methods like organic social media or SEO?

Of course, free marketing techniques come at a cost in terms of time. It may take hours a day to create social media posts and track them. Paid marketing may have a higher return on investment than free marketing and advertising tactics.

When sales start to dwindle even slightly, many new business owners become anxious and cut back on the marketing budget. This is the worst thing you can do because marketing drives growth in sales.

Some checkpoints for the control of marketing budget

Regardless of how much money is set aside for promotions, all companies will benefit from a system of checkpoints to ensure that marketing dollars are spent wisely. Here are a few ideas for reducing marketing waste:

  • Have a solid marketing strategy in place

Prepare a budget and a strategy for achieving the objectives. Keep a close look at the plan and divide it into small objectives for easy tracking.

  • Keep track of your investment's return

Assess your spending and the current efficacy of all of your operations. Google Analytics and call monitoring are useful tools, but also basic spreadsheets or pen and paper are preferable to none. Investigate why one quarter was more profitable than the next. Simply put, simple monitoring allows you to focus on what works while avoiding what doesn't.

  • Re-evaluate your plans.

Recognise that the marketing strategy you devised is adaptable and can be tweaked when required. Keep your goals in mind and monitor your progress across the year. There's no guarantee that your original strategy will work in the case of small business ideas, but as long as you know if your spending is meeting your marketing objectives and are able to make the necessary adjustments, you are on the right track.

Another way to consider your marketing budget is in terms of the sales growth you hope to achieve from your marketing activities.

marketing plan banner


By now, you already have everything you require to begin preparing your small business marketing budget. Without marketing, it would be difficult to expand the business. A marketing budget will assist you in making informed decisions as you grow your company.

Remember, for effective management of budget, you need an efficient tool like OkCredit for cost tracking. OKCredit will help you to maintain the daily ledger as well as keep track of expenses against the budget.

Also Read:

1) 9 Reasons Why You Should Use a Staff Management Platform for Your Business
2) Optimisation of Staff Management and Employee Interests in a Small Business
3) Top Software Ideas for Startups & SMEs for 2021
4) Why Choose OkStaff for Managing the Payroll of your Small Business?


Q. Is it necessary to do a competitor study before making a marketing budget?

Ans. You should do a proper competitor study before finalising a marketing budget. The marketing activity of competitors will give you an idea about the ideal channels for the promotion of your small business and what should be your marketing budget.

Q. Can I handle online marketing for my business on my own?

Ans. You can do online marketing on your own. However, since as a business owner, you have multiple things to do, you can employ a competent digital marketing agency to do it on your behalf.

Q. Do I need a big marketing budget for digital media?

Ans. Digital media is relatively low cost in comparison with offline media. You must therefore spend a limited amount on digital marketing.