I’ve been talking with a lot of owners of small service-based business lately, and in every conversation, I ask this question:
“How much do you spend on marketing your own business?”
Can you guess what the most common answer is?
Drum roll please…
It’s zero.
ZERO.
And do you know which business owners are most likely to give that answer?
The ones whose businesses offer marketing services.
Or, put in an endearingly old fashioned way, the cobbler’s kids have no shoes.
(And believe me when I tell you that the reason they’re not spending money on marketing is NOT because they're doing the marketing themselves. They often aren't.)
Now, I’m no CFO, but I can tell you that when it comes to marketing your business, $0 is the wrong dollar amount. Different sources online will give you different recommendations, ranging from 1% to 20% of your revenue.
Of course, the real number depends on if you’re B2B or B2C, service based or product based, huge or tiny. B2C product businesses will need to spend more than B2B service businesses, for example; and the bigger you are, the more you’ll need to spend to cover all of your overhead.
The closest number I’ve found that will be most relevant to most of you is this Web Strategies report that says B2B service businesses budgeted 7.5% of their revenue (or 9% of their total budget) for marketing in 2022. This percentage includes “things like marketing staff, customer relationship management, investments paid to agencies and other outside suppliers, advertising costs, media spend, etc.”
(You can also use their handy marketing budget calculator if your firm makes at least $1M in revenue and has at least one dedicated marketing person.)
Doesn’t 7.5% make a lot more sense than 0%?
So here’s what I don’t get.
Of all the things you spend money on, why would you NOT spend money on getting more clients?
Isn’t that the thing you need the most?
What’s that you say? You get all of your clients from referrals?
That’s great! Then how are you marketing to your network?
Staying top of mind doesn’t happen without effort. And effort usually has a price tag. Time is money, as they say.
So next time you’re looking at your budget, make sure you include a line item (or two or three) for marketing. And then actually use that money for marketing. And don’t automatically cut it when times are tough.
It may not pay off immediately (but it might!). It may take some experimenting to find out what type of marketing is most effective for your business. But if you don’t start, you’ll never know what’s possible.
Edited to add: A few weeks after I posted this article, I listened to this very helpful podcast episode from 2Bobs; you should listen to it, too (or read the transcript at the link). They focus on creative firms and give real monthly numbers on how much to spend on each element of marketing: How Much Should You Spend on Your Own Marketing?