How much should a small business spend on marketing?
A simple way to set a budget from your revenue and your margin, not a guess.
The honest answer is that it depends on your margin, not on a percentage you read somewhere. Here is a way to arrive at a number you can defend.
Work backwards from a customer
Take what an average customer is worth to you over a year, and what it costs you to serve them. What is left is what you can spend to win one. Anything under that number is a good trade.
Then decide how many you want
Multiply what you can afford to spend per customer by how many more you want each month. That is your budget. It is a number that came from your business rather than an industry average.
Review it every quarter
As your close rate improves, you can afford to pay more per enquiry than your competitors. That is usually the real advantage, not a clever channel.
The Spark Ink team
The people who handle content, ads, and websites for businesses in Kampala and across the US, UK, and Canada. We write what we wish more clients knew.
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