As a local business you are most likely wondering how much you should spend on marketing. There is a rule of thumb. Generally speaking you can calculate your company’s ideal marketing budget. If you want to maintain your current market visibility you should plan on spending 5% of your total revenue. If you are looking to see your businesses grow and gain a larger market share then you should plan to spend 10% of your total revenue on marketing. Of course it is not always cut and dry. Other things to consider would be how tough your competition is, the age of your business, your business credibility, and whether or not you’ve established branding. If you are a new kid on the block you may expect to spend considerably more on marketing just because you have yet to establish a name for yourself. The faster you can gain recognition the better off your business will be. This means that when making your business plan you want to have a fairly large marketing budget that will get you on the map so that you can dial back on those expenses sooner rather than later.
In general the 5% and 10% rules are based on companies that have at least a six figure total revenue income. If you have not reach this level yet you’re going to have to consider that you must spend at least what your competition spends. This is not an easy thing to find out I guarantee you that if you call your competitor he’s not going to tell you what he spends. You can certainly browse the web and see how many times your competitor places Adwords ads. You can use keyword tools in Adwords to see approximately the cost per click for each key word you would like to rank for. Check local print advertising for your competition also. You should be able to call the publishers to get an idea of what a similar ad will cost you. Continue reading