Bottom Line: For A Microbusiness To Become A Small Business, Investing in Marketing Is the Key To Growth.
It’s common for a typical marketing budget for a small business to range somewhere between 10-15% of annual revenues. However, for businesses that are looking to scale quickly, the range should fall between 25-35%. This is because digital marketing continues to grow. Nowadays, there are far more channels with which to reach potential customers. If you were to calculate the investment at 15% vs 35% for businesses at various stages of growth, the actual dollar amount would reflect something similar to the following table:
Marketing Budget Table for Small-Medium Sized Businesses
|Business Size (based on annual revenue)||Marketing |
(at 15% vs 35%)
On the lower end, the marketing cost for a micro business generating $50,000 a year would be between $625-$1460 per month–an additional $840 could make all the difference! At this stage, it should be clear that most of the revenues generated for the business would need to be reinvested in order for the business to grow. For a micro business, $1460 seems like a lot of money. But this investment pays off when properly applied. Like many things, it takes time for the investment to deliver results. The key is having patience, discipline and focus.
The truth is that every facet of marketing comes with its own array of budgeting considerations. Each expenditure has to be measured against is potential return on investment. For any small business, the investment might require something similar to the following table:
Typical Breakdown of Digital Marketing Expenses:
|Marketing Item||Monthly Cost Range||Annual Cost Range|
|Website build & maintenance||$50-$900||$600-$10,800|
|Sales Funnel & Email Marketing||$55-$3500||$660-$42,000|
|Social Media Management||$25-$700||$300-$8,400|
|Strategic Planning & Content Management||$80-$250||$960-$3,000|
There’s a detailed breakdown for this pricing table in the paragraphs to follow. These steps, along with other guides, should help when drafting a marketing budget.
Let’s take a look at how a marketing budget could be allocated in a given month. For our purposes, we’re going to pay special attention to digital marketing. At a minimum, there are several factors to consider for a digital marketing budget, including:
- The cost to build and maintain a website.
- The cost to generate a value-driven sales funnel (more details on this later).
- The cost to conduct consistent social media engagement.
- The cost to run ads on different online channels.
- The cost to generate regular, meaningful content.
The Cost to Build and Maintain A Website
We’ve discussed in other articles the price ranges for building a do-it-yourself website. At the very cheapest, the basic packages for the most popular website builders are between $20-30 dollars a month. This price does not include any add-on features that many of these applications offer. For now, let’s assume that a micro business is paying for basic services, including the cost of maintaining the site. Let’s also assume that the website has been designed in a way that fosters a meaningful experience for visitors and prospective customers. That brings this cost to approximately $50 a month. This is but one component of our marketing budget.
The Sales Funnel
As part of delivering a meaningful online experience, prospective customers are on a buyer’s journey. This is another way of saying that people are searching online for a way to solve their particular problem. Provided that your website’s design takes this into consideration, the goal is to convert site visitors into paying customers. This process involves moving people through the stages of a sales funnel, commonly referred to as Awareness, Interest, Decision and Action or AIDA. A key component of AIDA involves capturing and retaining leads, most often through obtaining an email address.
There are plenty of applications that to help businesses collect, maintain and communicate through email. These email marketing products can range in price depending on the features and complexity of offerings. The price range for several popular options is between $10-$25 a month. Yet again, these are often introductory prices for the most basic features. The cost to help automate and schedule emails is yet another consideration—it’s a big one given that the efficiency and ease it provides. For now, let’s assume a basic average price of $25 a month for email marketing services along with another $20 a month for automation. That brings our total price for email marketing to $55 a month.
Social Media Management
Social media management can be a tricky expense. For one thing, it’s certainly cheaper for many entrepreneurs to craft and post content themselves. On the other hand, it takes time not only to generate content on a consistent basis, but also to foster engagement with that content in order to cultivate a following. At a minimum, it certainly helps to automate and aggregate content through a management tool, especially when utilizing several platforms at once. This is why tools like Buffer and Hootsuite were created. These tools are designed to help streamline the process of maintaining a robust social media presence. The prices for social media management tools are a wide range, anywhere between $10-$300 a month. For the sake of simplicity, let’s assume a base price of $25 a month.
When it comes to digital marketing, running paid advertisements is essentially its own separate category. This is because running paid ads can be a costly endeavor (though it can yield very lucrative results). Facebook, Google and YouTube each offer different packages for running ads. While the price of running a single ad is pretty cheap, the cost comes in determining the time, scope and frequency of ads. Of course, channels like Instagram and TikTok offer their own ad packages as well. It’s common for businesses to allocate another 15% on average for paid advertising in addition to other marketing expenses. For the smallest budget, this equates to around $94-95 dollars a month. The price goes up for reaching a broader audience, and this is important when factoring the potential return on investment.
Strategic Planning & Content Management
It’s impossible to create a meaningful user experience without quality content. Every aspect of marketing, from building a website to email marketing to social media to paid advertisements—all of it requires relevant and engaging content. This includes writing copy for blogs and articles (like this one) as well as content for the website, email, social media and advertisements. Marketing is nothing without the images and words behind every facet of communication. After all, every business is telling a story to customers about making their lives better through the product or service being offered. The story has to resonate in order to foster awareness that leads to action. This will ultimately create revenue growth. A digital coach can provide guidance with this process, and the price for working with a coach can range between $80-$200 a month. The key is finding coaches that can specialize in the process of digital marketing. In addition to the other basics of marketing, this is one of the most prudent investments that a growing business can make.