Why A Marketing Budget is Critical to the Success of Your SMB

Many companies don’t really know what their annual budget for marketing is and very few SMBs even have a formal marketing budget in place.

It’s a bit of a science and an art with many factors to consider. What exactly makes up a marketing budget? What’s typical in your industry? How much are your competitors spending?

What’s the right marketing budget for you?

As marketers we understand the complexities of determining the right marketing budget for your company. We’ve stared down the above questions ourselves and through trial and error have come up with what we think is a list of the best reasons to establish one.

Most important driver of success

But before we go any further, it’s important to state that since marketing affects pretty well all areas of your business, your marketing budget is arguably the most crucial component of your success.

We’ll even go as far as saying that without a formal marketing budget, you put your company at risk for making impulsive – and expensive – marketing decisions that don’t generate your intended results.

Top 5 benefits of a marketing budget

  1. It establishes a clear sense of direction for the management of your marketing strategies
  2. It enables you to allocate precious and finite financial resources more effectively
  3. It encourages coordination and planning with other areas of your business i.e. finance, operations, HR, etc., as well as integrating with the staff in those departments
  4. It establishes a framework for accurately assessing the results of your various marketing efforts i.e. you can easily determine how much you actually spent vs. how much you earned from a particular marketing source
  5. It will make your company much more successful! Seriously. If you can accurately determine how much to spend, you’ll have a better idea of which marketing avenues you should pursue to maximize your marketing ROI

Primary marketing budget categories

Your marketing budget should cover the macro aspects of your business. Start with target market research, their needs & challenges, product demand, and financial projections. This will help set your communication strategies, marketing channels & quarterly sales goals


Within each of the above budget categories are several sub-categories of spending. These can include cost of sales force required, CRM software, branding, web design & development, digital marketing, trade shows, sales collateral, printing etc. necessary to support your plan.

How much to spend on marketing?

There are various formulas for determining just how much your SMB should spend and it can be a bit overwhelming. Many companies spend approximately 3-4% of their gross revenue on marketing and with an organized plan and defined marketing budget that can often be enough. However, for companies in growth mode the best marketing ROI spent between 6-10% of their gross revenue.

Be encouraged

We get that defining and allocating a set marketing budget can be a bit of a challenge for many small business owners and marketing managers. Remember that there’s no perfect or absolute marketing budget. It’s important to be flexible, and know that your budget can fluctuate as your revenue does.

Measuring marketing metrics that drive revenue

Start by evaluating your spending, do your homework and assess your success against your competitors, look at your historical data and measure metrics like leads & customers converted, revenue generated etc.

Successful businesses know that marketing drives revenue, not the other way around.

marketing budget guide

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