Blog

It’s a common misconception that you need to be a millionaire to start a successful business. But that simply isn’t true. In fact, you can start with as little as $100,000 in revenue and still make six figures from your marketing efforts alone! So how much should you budget for marketing if you’re just getting started?

Here’s our breakdown of what it takes to run effective marketing campaigns across various revenue levels:

60-70% of a Company’s Revenue

• If you’re a small business, your total revenue is around $100K. You can afford a marketing budget of about $10K per month.
• If you’re a medium business, your total revenue is around $1M. You can afford a marketing budget of about $20K per month.
• If you’re a large business, your total revenue is around $10M. You can afford a marketing budget of about $200K per month.

If you’re very large—a household name with an international following—your total revenue might be in the billions! Of course, if this sounds like where your company is heading, then we’d suggest hiring an outside firm to handle all things related to social media management and digital advertising for maximum impact on the market’s perception of your business. However, even if you are still small, the right firm can help you create the perfect marketing strategy for your business needs and budget. Let’s break it down!

$200,000 – $500,000 Annual Revenue

If your annual revenue is in the $200,000 – $500,000 range, you should budget between 2% and 7% of your gross revenue.

You may want to consider spending more than 7%, as some marketing tactics can be very effective at increasing sales quickly. However, if you spend too much money on marketing without seeing any results, it’s important for you to be able to cut back on your spending.

Your budget should include:

• Marketing costs (marketing agency fees, design costs, etc.)
• Training costs (training new employees)

$500,000 – $1 Million Annual Revenue

If your company is in this category, you should be budgeting between 5% and 10% of your revenue for marketing. The amount you choose to spend on marketing will depend on the stage of your business, but it’s safe to say that a good portion of that money should go toward advertising.

As mentioned above, as long as you’re prepared to keep an eye on things and make adjustments when needed, there’s not much reason why you can’t get away with spending less than 10%. However, don’t try saving money by cutting back too far—you need enough funds in place so that your marketing efforts have time to pay off before they run out.

$2 Million – $5 Million Annual Revenue

Ideally, you should be spending between 10-20% of your annual revenue on marketing. This will help you keep up with your competition and stay competitive.

You should be prepared to spend more money on digital marketing and less on traditional forms of advertising because it’s cheaper and more effective than traditional methods like TV commercials. In fact, many experts agree that this is the only way to go if you want to see results from your advertising campaigns.

$5 Million – $10 Million Annual Revenue

For an annual revenue between $5 million and $10 million, the rule is to spend at least 70% of your revenue on marketing, 20% on sales, and 10% on tools.

Don’t forget to include overhead costs in this calculation. The more money you make, the higher your overhead costs will be as well!

In addition, remember that taxes should be taken out before calculating how much money you need to spend each year; if you don’t take taxes into account when looking at your budget, then it’s possible that you’ll end up spending more than necessary because the IRS takes a big chunk out of whatever profit is left over after all those other expenses are paid for.

$100+ Million Annual Revenue

Looking at companies with $100 million in revenue or more, we see that most of them are marketing their products and services. These companies have invested heavily in digital advertising, print media, and other forms of marketing.

If you want to grow your business, you must prioritize a strategic marketing plan. The right kind of marketing will cost money but it will also bring back a return on your investment.

You don’t need to be a millionaire to start a successful business.

There’s no such thing as a successful business with no budget. If you’re going to start a business, you’ll need to invest in marketing at some point.

• You don’t need to be a millionaire to start a successful business.
• You don’t need to be an expert or have years of experience to build your idea into something great.
• Money isn’t always the key ingredient for success; sometimes it’s passion and determination that can make the world go round!

Conclusion

It’s an exciting time to be a marketer. Data and digital marketing tools have never been more powerful, and the best part is that you can start small and grow as your company does. There are so many different ways to approach marketing in your business, but we hope this guide has helped provide some direction on how much time or money should go into each one of them. If you need help with your marketing and advertising needs, consider contacting us at Reversed Out. 

---

---

Next Article: The Emergence Of ChatGPT | How Does It Apply To Startups And Side Hustles?