How Much Should Your Small Business Spend on Marketing?

Creating a budget and choosing ways to market your small business is a huge part of your organization’s ongoing recipe for success. Why? To put it plainly, without marketing, nobody is going to learn about your products and services, and if nobody knows about you, you’ll fail fast! A marketing budget must be part of your plan from the start.

We know that small businesses often have employees who must wear many hats, and who knows, yours might only have one employee doing everything — you! Even more reason to have a solid marketing plan in place to invest in ads that will work for you year-round, so that you can focus on the other tasks needed to strengthen your enterprise. Follow these foundational marketing tips to gain early success with your new business or improve your current marketing strategy.

Marketing Foundations: What IS Marketing Anyway?

Marketing is the way a small business helps the right people notice, remember, and ultimately choose it. It includes everything from how you introduce your business to how often people see your name, hear your company’s story, and understand what makes you worth their trust. For a local business, good marketing is more about showing up consistently in the community you serve than trying to reach a national audience.

This is why local marketing matters so much to the success of a small business. When people see (or hear) your advertisements in places they already recognize, know, and trust — like community newsletters, parish bulletins, neighborhood events, and local gathering spaces — your business begins to feel more and more familiar to them. That sense of familiarity is what your goal is. Placing your ads in these areas builds awareness and trust for your company by association, and that trust is the thing that often comes before a call, visit, or purchase. Trust is the point!

Some small business marketing ideas that build local trust:

 Don’t miss out on an opportunity to reach people where they already are. Here are some opportunities local businesses should consider.

• Ads in local publications like community newsletters or church bulletins
• Booths or sponsorships at farmers’ markets, festivals, and community events
• Hosting a short workshop, demo, or Q&A in your community
• Leaving helpful printed materials in waiting rooms or on coffee shop bulletin boards
• Supporting/sponsoring a neighborhood cause, event, or service project that people will remember
• Listing your ad on digital directories in the local area

Once you’ve chosen a few ways to advertise locally, the next step is deciding how much to spend on the methods that best fit your goals.

How Much Does Marketing Cost for a Small Business

How much marketing will cost depends on the method by which you choose to advertise and how often you want your ads to appear. For small businesses, marketing can be surprisingly flexible without losing quality. You don’t always need a massive budget to get started. What will make the biggest difference is making sure you choose options that fit your goals, your market, and are consistent over time.

Before worrying about a number, first clearly lay out what your marketing goals are. Are you trying to get consumers to purchase something, attend an event, or sign up? Are you looking specifically to get leads or close sales?

Next, discern who your target audience or market is. Is your business a restaurant or café with a wide range of customers, or are you marketing toward a more specific audience, such as an assisted living facility or dog grooming business? Once you have an idea of the demographic(s), you can determine which type of marketing would best reach them and budget accordingly.

Advertising locally in trusted community publications can offer a wide range of entry points. When you place an ad with the help of a company like LPi, print ads on the back of a parish bulletin or community newsletter can cost as low as $445 for the entire year, with larger, higher-visibility options available, too.

LPi also offers add-ons that make it easy to include a digital ad in local online directories connected with the same publication as your print ad. Digital ads in directories like Parishes Online and My Community Online offer a cost-effective way to bundle print and digital together, helping you expand your reach without stretching your budget.

The takeaway is simple: small-business marketing does not have a single fixed price. It can be built around your budget. Whether you start small with one local placement or invest in a larger campaign, the key is spending with purpose — something we will look at next.

Ways to Optimize Your Marketing Budget

A practical starting point for a business hoping to target the local market is to set your marketing budget as a share of your revenue, then adjust it over time based on its results. It’s common to allocate about 2% to 5% of revenue toward marketing for business-to-business (B2B) companies and 5% to 10% for business-to-consumer (B2C) companies. The U.S. Chamber repeats the same ranges in its small-business budgeting guidance.

If you want a few specific benchmark examples, the SBA cites outside research showing that average advertising spend in 2018 was 1.08% of total revenue, with retail marketing spending around 4% and restaurants at around 1.93%. In the same SBA research, broader marketing spend across industries was reported at 6.3% for B2B product companies, 6.9% for B2B services, 9.6% for B2C product companies, and 11.8% for B2C services.

To optimize your marketing budget, start with one or two channels that match your audience, track where the leads you are getting are actually coming from, and review your performance quarterly. The U.S. Chamber recommends tying spending to clear goals and scaling back channels that yield a negative return on investment (ROI).

Be aware, though: there is no universal marketing spending level that guarantees you a profit. You will have to feel it out and do what seems right for your individual business. But doing things like committing to disciplined tracking helps you find the point at which your marketing generates more revenue than it costs you.

To simplify the process of advertising locally inside publications and directories people trust, get in touch with LPi today!