inluminent

Adam Kalsey wrote a great intro to small business costs in response to an article he read that wasn’t up to par in his opinion.

Adam covers things like Merchant Accounts, Secure Certificates, Marketing, Cataglog and Shopping Cart Software, and Implementation, briefly, but well.

I’d like to add a little to the marketing advice Adam gives.

In my experience, most companies spend between 10% and 15% of their annual revenues on marketing, and are successful at that level. As company’s get larger, they add products to their list of offerings, and that’s where the marketing gets confusing for those businesses. Some companies only market their products, some market their brand over their individual products. Both approaches work, but product marketing is generally less expensive and more measurable than brand marketing.

My advice to any company starting up would be to spend 15-30% of their expected revenues on marketing in the first year, and then 30% of their real year one revenues on marketing in year two. In years 3-5, marketing can generally be stepped down as a percentage of the budget, and with a successful product, 5% of the annual revenues for years 5-10 will be sufficient for most products.

Of course, you can get by on less, but you get what you pay for. Just make sure that you’re spending your money on media placements, not on consulting… you should never spend more than 15% of your marketing budget on advice.