If you search online for “how to build a website for cheap”, or “how much does it cost to build a website from scratch?” there’s no shortage of articles that address this topic. What’s more, the answers to these questions vary wildly. A small business will certainly spend less on building a website than a medium sized company. However, a really small business—or microbusiness—will have even less to spend on a website than a more established small business. This is in fact a huge problem when trying to determine the true cost of digital marketing if your business is (truly) small.
So, the real question becomes, how much should a microbusiness spend on a website versus a small business? Rather, what sort of investment does it take to turn a microbusiness into a more established small business? To answer this question, it helps to clearly define the difference between a small business and a microbusiness. This will help us to gain a better understanding of the cost of digital marketing in proportion to how much revenue the business generates. We will get to specific numbers by way of thinking of digital marketing as a percentage of the marketing budget. Additionally, we will see how the balance of time and money plays a major factor in determining true cost.
Micro vs Small
Firstly, the difference between a microbusiness and small business usually comes down to the number of employees and the amount of annual revenue. A microbusiness typically has fewer than 10 employees and generates less than 250,000 in annual revenue (anything smaller than this may be considered a ‘nano-business’). A small business, according the US Census Bureau, is firm ranging between $1 million to $50 million in revenue with as few as 50 and up to 1500 employees. There’s obviously a gap in determining micro versus small depending how each is being defined. In any case, a microbusiness or nano-business is going to have a lot less funds available to spend on marketing than a small business making millions in revenue.
DIY Options for Microbusiness
We’ve discussed in other articles how building a website from scratch can be a cheaper option but can be more costly in terms of time and energy. And time is a significant factor to consider for a microbusiness. How many things can you manage as a solopreneur? Every entrepreneur eventually learns that—in order for the business to grow—some tasks will have to be outsourced. Marketing is a necessity in order to reach more customers. Therefore, small businesses should seek outside assistance with digital marketing.
Understanding Marketing Budgets
But how much is reasonable to spend? At the very bottom are low-cost options through website building platforms like Wix, Squarespace, Weebly, and so on. The basic packages for these apps can range between $20-30 dollars a month (or between $300-400 dollars annually). Most of them offer add-on features like email marketing or ecommerce solutions—these options carry an additional monthly cost. Factor in other applications like social media management, customer service, and more—and it’s safe to say that a microbusiness could easily spend between $500-$1000 a year on marketing. This doesn’t include other marketing efforts beyond digital, including printing flyers, business cards, running ads, and so on. However, spending the bare minimum on marketing is less than ideal when seeking to grow. The issue for microbusinesses is that a bigger marketing budget presents a greater risk than it would for a small business with more revenue. This is why there’s a common misconception about how much a business should budget for marketing. A small business generating $500,000 a year might allocate 10% of projected revenue on marketing, which would equal $50,000 a year. But a microbusiness making $50,000 annually spending 10% would allocate only $5,000 a year.
The difference comes down to the level of expected growth for the business. If that same microbusiness has a goal of generating $150,000 in revenues over the next two years, then the marketing budget needs to reflect that projected growth. It’s reasonable to expect that microbusiness to increase its marketing budget to 15% or even 25%. The reality is that effective marketing is the only way to reach more potential customers.
How can a microbusiness make a more calculated investment in marketing? Unfortunately, the traditional method for many years has been to make misinformed or uninformed decisions. The other issue is that a smaller budget usually means fewer options. Microbusinesses simply can’t afford to pay digital marketing agencies to help them figure out SEO and other critical components. This is a form of digital equity that needs to be addressed for BIPOC entrepreneurs in particular. The truth is, it’s completely feasible to make a minimal upfront investment in marketing (relatively speaking) and still see fantastic returns on that investment. The key involves getting guidance from a trusted mentor, coach, or advisor that understands digital marketing. This person can then connect the microbusiness with affordable resources for developing a website and crafting a holistic marketing strategy. The alternative method of searching aimlessly online for resources and making impulsive, haphazard decisions ends up wasting more time and costs more money.
Having a Plan
As the adage goes, “if you fail to plan, you plan to fail.” When entrepreneurs operate in crisis mode, bad things happen. Some of the most successful entrepreneurs aren’t necessarily the best planners, but they are able to be self-aware enough to recognize the importance of strategic planning (and to seek outside expertise where needed). It’s also difficult to step back and see the bigger picture while in the midst of managing day-to-day activities. This is yet another reason why working with a good coach is a worthwhile investment. Digital marketing is so vital to business growth in the 21st century that it requires a lot of attention to detail. A digital coach can offer focus, clarity and accountability to take action and ensure a plan’s success.