Baby's First Budget: How Start-ups Should Allocate Marketing Spend

Baby's First Budget: How Start-ups Should Allocate Marketing Spend

Let's get this out of the way: it's hard to talk about money. This is especially true if you are a bootstrapping new brand that hasn't launched or marketed itself yet. It's hard to know how to allocate your marketing spend.

When you're in start-up mode, most of your cash flow goes toward getting your product or service up and running, but if you forget to factor in marketing dollars, no one will know, like or trust you once you're finally on market. You need to create a logo, build a website, maybe host an event and develop promotional collateral—all of which can be costly. You need to spend smart.

How big should my marketing budget be?

Your marketing budget should be determined by your revenue (or expected revenue if you haven't yet launched).

Start-ups and new brands need to allocate 12% to 20% of their total revenue to marketing. As you know, you are entering a market that does not know, like or trust you yet. You need to prime your audience. You need to nurture the need for your product or service.

Established brands, which are those who've been on the market for five or more years and/or have had an early explosion of exposure, need to allocate 6% to 12% of their total revenue to marketing. This number changes, of course, depending on your industry, the economy, etc.

Two pie charts that show 6 to 12% for start-ups and 12 to 20% for established brands

How much do I spend on ____?

It's important to remember that costs vary by industry and many other factors, so the only way to really know what to spend on your website or brand identity, for instance, is to talk to a marketing and branding agency. (Hi there! 👋) However, here are some decent estimates to get you thinking about how to allocate those marketing budgets appropriately.

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