4 Marketing Budget Hacks That Will Boost Your Business in 2024

Managing your business’s budget can be a delicate balancing act, like a juggling circus performer. One ball may be your expenses on the essentials — your building, insurance, payroll and any other necessities to keep operations going. Another ball is delivering your product or services, and of course, one of those balls is how you find new customers, aka your marketing.

None of those balls can really be dropped, but their weight can be adjusted to achieve the right balance. One of the most challenging aspects of running a business is figuring out how much “weight” — or money — to put into each area.

In my experience, there’s one area most neglected by business owners: marketing. But I’m here to tell you that you don’t have to become a marketing guru to make it work and consistently bring in new business.

The end of the year is really the best time to do a thorough evaluation of your marketing budget. Keep reading for tried and true tips to create a marketing budget that really moves the needle on your success.

1. Figure out your baseline marketing budget first

Your marketing budget should be a percentage of your revenue. Consider these statistics when planning it out for the year:

• Companies that grew 1-15% year over year spent an average of 16.5% of their revenue on marketing.
• Companies that grew 16-30% year over year spent an average of 22% of their revenue on marketing.
• Companies that grew 31-100% year over year spent an average of 50.2% of their revenue on marketing.

As you can see, the more these companies spent on marketing, the more they grew.

So, how do you determine your magic number? Although bigger corporations might spend 50% on marketing, that doesn’t mean you have to. The U.S. Small Business Administration (SBA) recommends spending at least 7% of your gross revenue on marketing.

For example, if your gross annual revenue was $500,000, and you decided to invest 7%, your marketing budget would be $35,000 for the entire year.

You should also factor in your competition to determine your ideal budget. Spend some time researching your competitors — even signing up for their newsletters and other marketing content — and then determine how many other businesses you are up against.

One way to do this is to rate your level of competition on a scale of 1 to 10. If you find there are multiple established businesses that are selling the same products or services as you, you’re at a 10. But if you’re selling something unique in your industry, you’re at a 1. The higher your number is, the more you need to spend on marketing — beyond the SBA’s recommended 7%.

Remember that you are never married to the number. You can change it throughout the year as needed.

2. If you want to grow your business next year, budget 12-18%

Don’t make the (all too common) mistake of slacking on marketing when business is good. If sales are strong and you want to keep growing, keep your budget in a range of 12-18%. The latest studies show that, on average, marketers are spending just under 11% of revenue on marketing, so keep your number closer to 18% if you want to grow faster.

Just remember to closely track your lead and revenue sources to determine what’s working best for you. Marketing success isn’t just about how much you’re spending — it’s about spending your budget wisely on strategies that deliver a good return on investment.

Consider integrating different types of marketing if your sales need a boost. Research shows that direct mail combined with digital ads elicits 39% more attention than single-media digital campaigns. So, split it up!

3. If your business is showing signs of decline, raise your budget 3-10%

When times get tough, it’s time to crank up your marketing. Increase your marketing budget by at least 3%, but I suggest 10% or more. At the 6-month mark, assess the impact. If you still aren’t seeing any change, review your tactics, but don’t cut back on the budget.

The biggest lesson I ever learned is that cutting back on marketing when times are tough is a huge mistake! Over the past 25 years as a company, PostcardMania has survived two major economic setbacks — one just barely and another with flying colors. The difference? My marketing budget.

In 2008, revenue was down for the first time in company history, but only by $150,000 or so. Still, with the mortgage and real estate markets crashing (and making up a huge portion of our clientele at the time), I was worried. An advisor suggested I reduce our marketing, and I listened against my better judgment. What resulted in 2009 was our worst year yet with revenue slipping 15% and my business barely surviving. I did a huge course correction in 2010; I increased our budget back to the pre-crash number (and then some), and our revenues quickly recovered. In fact, 2010 became a new record year for us for revenue.

Then, in 2020, our revenue dropped 41% pretty much overnight due to the pandemic, but this time I refused to cut our marketing. This allowed us to increase leads by 9.24% in the six months following May 1, 2020, averaging an extra 186 leads per week without increasing the budget. Since then, we’ve averaged 20% annual revenue growth following a decade of averaging 5% growth.

The bottom line: Marketing is a necessity you can’t afford to cut.

4. If you are launching a new business or product/service next year, budget 25-35%

A new business, product or service is a crucial moment because you’re starting from zero. Marketing is not just designed to bring in revenue — it is also designed to raise awareness. When you’re starting from nothing, you need to be intentional about raising brand awareness and establishing a foothold in your market.

A recent study said startup businesses should devote between 20-30% of their total annual budget to advertising and marketing during the first and second years. This may feel steep, but an aggressive marketing strategy will get the most eyes on your message and create buzz around your new products/services.

After running a multi-million-dollar company for years, I understand all the balls you are juggling as a business owner, and it can be difficult. Just promise me you won’t let the marketing ball drop — your success depends on it.

Source: Entrepreneurship.com