By Rafael Caamano, BBA, MBA
Rafael, how much should I budget for marketing?
This is a question that I get frequently and one that the answer may vary due to several factors, including the size of the company, its revenue, industry, target audience, and marketing goals. Small businesses should allocate 7-8% of their total revenue toward marketing. This percentage is based on industry research and best practices and is often cited as a benchmark for small businesses to use when determining their marketing budget.
This percentage is seen as a good starting point for small businesses, as it provides a manageable marketing budget while also ensuring adequate resources are allocated toward building brand recognition and driving growth. However, it is essential to remember that the actual percentage may vary based on the specific needs and circumstances of the business and that businesses should adjust their marketing budget as needed to achieve their desired results.
For example, if a small business has a revenue of $100,000, it should aim to spend between $7,000 and $8,000 on marketing annually. However, if the company operates in a highly competitive industry or has a large target audience, it may need to allocate more of its budget to marketing. It’s also important to remember that marketing is an investment, not a cost, and can drive growth and success for a small business.
As such, small companies should be strategic and intentional in their approach to marketing and allocate the resources necessary to achieve their desired results. Ask your site manager for an industry report or try to get one from your local library the information can help you with your decision.
The University of Central Florida Business Incubation Program is a community resource that provides early-stage companies with the tools, training, and infrastructure to become financially stable, high growth/impact enterprises. Since 1999, this award-winning program has provided vital business development resources resulting in over 300 local startup companies reaching their potential faster and graduating into the community where they continue to grow and positively impact the local economy.
With eight facilities throughout the region, the UCF Business Incubation Program is an economic development partnership between the University of Central Florida, the Corridor, Orange, Osceola, Seminole, and Volusia Counties, and the cities of Kissimmee, Orlando, and Winter Springs. For the 2017/2018 fiscal years, the activities of these participating firms have helped to sustain more than 6,725 local jobs and have had a cumulative impact of over $725 million on regional GDP and over $1.3 billion on regional sales. During the same period, the program has returned more than $12.00 in state and local taxes for every $1.00 invested in the program. In addition, for every $1.00 of public investment, the firms also produced $118 of additional regional GDP and $226 of regional sales. For more information, visit www.incubator.ucf.edu.