Small to medium sized business owners often ask, “How much should I spend on marketing?” The answer: “It varies by industry and business size.” It is also based on how much and how fast you want to grow.

SCORE (Service Corps of Retired Executives) and USSBA (U.S. Small Business Administration) define an effective marketing budget to be between 2% and 10% of sales. Business to Consumer, retail and pharmaceuticals can exceed 20% during peak brand-building (company recognition) years.

I'm sure that you've all heard this before; “You have to spend money to make money." Most companies under spend on their budgets, thinking that not to spend is to save. This isn’t true. Keep in mind that your marketing efforts are directly proportional to your revenue, so now is not the time to be penny foolish.

The marketing budget for businesses with under $1 million of yearly sales averages 7-8%. If your company is B2B or B2C, you may need to raise your budget by 1–3% to see solid results. Retail and pharmaceuticals lead the spending, with many of these companies spending more than 20% of net sales. Overall average is reported as 6%.

Some circumstances will merit an increase or reduction in your marketing budget as a percentage of revenue. During an initial branding build (business recognition) or a re-branding phase, you should have a higher budget, which can be reduced in the future.

You can grow your company with “baby steps”. This is called organic growth, and it is how nearly every business starts off. Remember washing cars or mowing lawns for a few bucks? Next thing you know, your neighbor wants it done. That neighbor refers you to another neighbor, and so on. Many businesses grow their clientele on word of mouth alone, and are very successful. But they usually hit a brick wall.

That’s where building a solid branding (business recognition) campaign helps. To rely on organic growth alone, you risk losing revenue from business you did not get because X% of potential clients never discovered you. Why risk thousands to save hundreds?

Many small to medium sized companies fail each year because they do not allocate enough money for marketing. Successful small & medium sized companies realize that marketing, if done properly, brings back solid returns, whereas not allocating enough in your budget for marketing could spell disaster.

More people than ever use the internet to find businesses and services. That being said, one of the most important ways to market your small business is to be sure that your business has an online presence. Having a small business website is not only one of the most important things that you can do to market your business, it is also one of the most cost effective ways to market to local, regional and worldwide audiences.

Tom Rumish Website Development specializes in affordable small business website designing and maintenance. Website client testimonials from our clients attest to the fact that what they have spent to have a website custom designed for their small business has invariably paid off greatly. Business websites that work = sales growth.

If your business does not have a website or if your existing website is outdated and not helping you gain new customers I urge you to contact Tom Rumish Website Development for a free, no obligation consultation.