Welcome to Part IV of our Ultimate Marketing Guide series, where we focus on a critical yet often overlooked aspect of building a successful marketing strategy: creating your marketing budget. By now, you’ve learned about the types of marketing every design business needs (Part I), how to align marketing strategies with your business stage (Part II), and how to build your marketing team (Part III). Now, it’s time to align your resources with your strategy.
In this part of the series, I’ll cover:
- The importance of a well-defined marketing budget
- How to allocate resources based on your business stage
- Factors to consider when setting your budget
- Mistakes to avoid while budgeting
By the end of this guide, you’ll have a framework to create a marketing budget that supports your goals, minimizes waste, and drives measurable results.
Why Your Marketing Budget Matters
A well-planned marketing budget is more than just a number; it’s a strategic tool that:
- Prioritizes your efforts: Ensures you’re investing in the right strategies for your stage.
- Manages risk: Prevents overspending on tactics that don’t align with your goals.
- Drives ROI: Allocates resources to activities that deliver measurable outcomes.
Without a clear budget, businesses often overspend on ineffective strategies or underinvest in high-impact areas, limiting growth. And, if you don’t plan where your marketing money will go, you’ll either end up investing in wrong activities or not knowing how much you need to invest to grow. With a plan, everything gets clear and manageable!
How to Budget by Business Stage
I’ve decided to work on percentage because it’s not realistic to claim any numbers given our global audience and multiple currencies. As you probably know, we’re not buying into the “6-figure this” or “7-figure that” marking lingo, because markets and price points are very different if you live and operate on Southern Europe, Asia, Middle East, or The US. (and, Design Tastemaker is red by hundreds of thousands of design professionals across the globe, thank you for tuning in!)
The percentage of revenue you allocate to marketing depends on your business stage and model. Below is a guide tailored to both service-based and product-based businesses:
Service-Based Businesses
- Starting Out (10-15% of revenue or sweat equity): At this stage, a higher investment is often necessary to build brand awareness from scratch. If budget is tight, replace monetary investment with sweat equity by dedicating significant time to creating content, managing social media, and optimizing SEO. Focus on organic growth and foundational tools if you don’t have funds to invest money.
- Growing (8-12% of revenue): Expand visibility with paid advertising, partnerships, and PR. Invest in automated systems to nurture leads.
- Scaling (12-18% of revenue): Optimize and scale campaigns while enhancing customer loyalty programs. Expand your team to include specialists.
- Expanding (15-20%+ of revenue): Target new markets and audiences with global campaigns, flagship events, and experiential marketing.
Service-Based Business Example:
- Annual Revenue: $200,000
- Stage: Growing Business (8-12% allocation)
- Marketing Budget: $16,000-$24,000 / year >>> $1300 – $2000 / month
- This budget typically allows extra pair of hands, and that would be best invested in content distribution on social channels and writing a regular email newsletter
Product-Based Businesses
- Starting Out (12-18% of revenue or sweat equity): Building e-commerce presence and brand awareness often requires higher initial investment. Replace some costs with time spent on DIY content creation, influencer outreach, and community building.
- Growing (12-18% of revenue): Increase investment in paid ads and influencer marketing to drive sales and customer acquisition.
- Scaling (18-25% of revenue): Focus on scaling campaigns, optimizing conversion rates, and enhancing customer retention strategies.
- Expanding (25-30%+ of revenue): Launch global campaigns, enter new markets, and invest in large-scale PR and experiential marketing efforts.
Product-Based Business Example:
- Annual Revenue: $750,000
- Stage: Scaling (18-25% allocation)
- Marketing Budget: $135,000-$187,500 >>> $11250 – $15625 / month
- Focus Areas: Multi-platform paid ads, conversion optimization tools, and customer retention programs.
As a general rule, you should expect to invest about 15-25% of your revenue to growing your visibility and driving leads to your business. Many times the lack of revenue growth is directly the cause of lacking marketing efforts.
Sweat Equity: Reducing Costs by Investing Time
In the early stages, when budgets are tight, sweat equity can replace financial investments. This means dedicating your own time to activities like:
- Writing blog posts and distributing them through online platforms
- Managing social media accounts and engaging with followers
- Learning the basics of SEO and implementing it on your website
- Building relationships with clients and partners
While sweat equity reduces financial costs, it does come with an opportunity cost: your time. Evaluate whether investing time in marketing or hiring support will yield the best long-term results for your business.
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Mistakes to Avoid When Budgeting
So, what are the biggest mistakes you should avoid when budgeting for your growth? Let’s dive in!
- Spending Too Early: Don’t pour money into expensive campaigns before establishing a solid brand foundation. This is why going organic and establishing partners is key at the early stage. And, you need to know how to sell!
- Ignoring ROI: Track every dollar spent and ensure activities are contributing to measurable outcomes. You must know your cost of lead generation, how many touches and the time it takes to turn a visitor into a buyer, and how much they spend on average with your brand.
- Neglecting Flexibility: Allocate a portion of your budget for unexpected opportunities or adjustments. Things happen, platforms close, and opportunities pop up > you need to be prepared for all of this!
- Underestimating Sweat Equity: If you’re investing time instead of money, track your hours to understand the true cost. The time you invest in your growth might not be billable, i.e. you don’t get paid for it (just yet). You still need to track it!
When To Expect Return on Marketing Investment?
Now here’s something we ALL wonder: when can I expect to see results of my marketing work? And I’d love to be able to say “very soon”, but in reality… I’d be lying. BUT, if you’re consistent with your marketing, you’ll see consistent results, every day.
But when, seriously?
What you do today will give you return in 6.-18 months. That’s it. So, what you’re doing today – whether it’s connecting with potential partners or posting on social media, tends to lead to projects in about 6 to 12 months time, GIVEN you’ve been consistent.
There are exceptions, though
You could launch a campaign over weekend and make lots of sales. If you have the right content and messaging, a product that people want, this can add a significant revenue to your business – fast. A campaign could be email campaign (requires a significant size of an email list), or a paid social (requires, often, strong brand awareness or a very unique product that people actually want to buy regardless of the brand recognition).
Again, that magical brand awareness and those email lists are all results of consistent marketing efforts. Sorry, but that’s just the reality 🙂
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