How to Create a Marketing Budget That Works for Your Business Without Breaking the Bank

  • Kevin Toney - the Marketing Coach
  • Business
  • January 17, 2025

We all know or should know that effective marketing is the lifeline of every business, it’s what drives revenue growth. One of the most common questions I get is: How much should I spend on marketing, and where should I allocate my resources? Without a clear marketing budget, you risk overspending, underspending, or wasting resources on strategies that don’t deliver results. Let’s break down how to create a marketing budget that drives success without breaking the bank.

Why Creating a Marketing Budget Matters

Marketing is an investment, not an expense. But to see returns, you need to spend strategically. Here’s why creating a marketing budget is essential:

  1. Avoid Wasting Money: Without a budget, it’s easy to overspend on tactics that yield little return or underspend on strategies that could drive growth. You leave yourself vulnerable to every new shiny marketing strategy and appeals by every salesperson or email offer.
  2. Plan for Growth: A marketing budget helps you align your spending with your business goals—whether that’s increasing brand awareness, driving sales, or launching a new product.
  3. Measure ROI Effectively: When you allocate specific amounts to campaigns or channels, you can track their performance and adjust based on results.
  4. Mitigate Risk: A well-planned budget helps you avoid financial strain by keeping your marketing spend within limits you can afford.
  • Example: A local coffee shop might overspend on a flashy billboard that barely increases foot traffic when a targeted social media campaign could bring in more customers at a fraction of the cost.

Steps to Create a Marketing Budget That Works

Here’s how you can create a marketing budget tailored to your business:

1. Understand Your Business Goals

2. Determine Your Overall Budget

A common rule of thumb is to allocate 5-10% of your annual revenue to marketing. For newer businesses looking to grow quickly, aim for the higher end of this range. Established businesses may lean toward 5%.

  • Example: If your annual revenue is $500,000, your marketing budget could range from $25,000 to $50,000 per year. Divide this into monthly amounts for easier tracking.

3. Break Down Your Budget by Channels

Allocate your budget across different marketing channels based on what aligns with your goals and target audience. Here’s a suggested breakdown:

  • Digital Advertising (30%): Google Ads, social media ads, etc.
  • Content Marketing (20%): Blog posts, videos, and other content creation.
  • Social Media Management (20%): Organic posting and engagement.
  • Email Marketing (15%): Newsletters, promotions, and customer retention campaigns.
  • Other Efforts (15%): Events, print materials, or influencer partnerships.

4. Research Costs for Each Channel

Take the time to understand what each channel will cost:

Running a Facebook ad campaign might cost $500-$1,000 per month, depending on your targeting and audience size.

Producing a high-quality video might cost $1,000-$5,000, but it can be reused across platforms.

5. Prioritize Based on ROI

If you’re unsure where to start, prioritize channels with a proven track record for high ROI. For instance:

Email marketing generates an average ROI of $36 for every $1 spent.

Social media advertising is highly effective for targeting specific audiences.

Comparing Approaches: Fixed vs. Flexible Budgets

  • Fixed Budget:

Allocates a set amount for each channel or campaign.

Best for businesses with predictable revenue and clear goals.

  • Flexible Budget:

Allows for adjustments based on campaign performance.

Ideal for testing new strategies or channels.

  • Example: A small bakery might set a fixed budget of $500/month for social media ads but keep $200/month flexible for seasonal promotions.

Case Study: A Small Restaurant’s Marketing Success

  • Background: A family-owned Italian restaurant wanted to attract more weekday diners.
  • Budget: $1,500/month
  • Strategy:
  1. Allocated $600 to targeted Facebook and Instagram ads promoting weekday lunch specials.
  2. Spent $300 on email marketing to offer discounts to existing customers.
  3. Invested $400 in creating a video showcasing the restaurant’s ambiance and menu.
  4. Kept $200 flexible for testing new ideas, like Google Ads.
  • Results:

Increased weekday lunch sales by 25% in three months.

Built a customer email list that continues to generate repeat visits.

Key Takeaways

A marketing budget ensures you spend strategically and measure results.

Align your budget with your business goals and prioritize high-ROI channels.

Use real data to adjust and optimize your budget as needed.

  • Remember: Even a small, well-planned budget can deliver big results when used effectively.

Ready to Take the Next Step?

If you’re ready to create a marketing plan that drives growth, I can help!

Kevin Toney, the Marketing Coach, helps small businesses & sales professionals attract new customers, boost repeat business, and generate a steady flow of referrals. 𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐞 𝐲𝐨𝐮𝐫 𝐅𝐑𝐄𝐄 𝟒𝟎-𝐦𝐢𝐧𝐮𝐭𝐞 𝐦𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐬𝐞𝐬𝐬𝐢𝐨𝐧 𝐭𝐨 𝐮𝐧𝐥𝐨𝐜𝐤 𝐲𝐨𝐮𝐫 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬’𝐬 𝐡𝐢𝐝𝐝𝐞𝐧 𝐠𝐫𝐨𝐰𝐭𝐡 𝐩𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥.👉 www.MarketingCoaching.ca | 1-204-783-6342

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