Most small businesses don’t have a marketing budget. They have a marketing mood. Money gets spent when things are quiet and panic sets in, then stops when the diary fills up. The result is a year of stop-start activity that never builds momentum.
A yearly marketing budget fixes that. Not a spreadsheet that gets made in January and ignored by March, but a working plan that tells you what you’re spending, when, and why. January is the obvious time to do it, but any month works if you’re honest about the twelve months ahead.
This guide walks through the process in order, from working out a total figure to deciding what to do when something isn’t working.
Start with what the business needs, not what others spend
You’ll find plenty of rules of thumb online about spending a set percentage of turnover on marketing. They’re a starting point for a conversation, nothing more. The right figure for you depends on how established you are, how competitive your market is, what a customer is worth and how ambitious your plans are.
A better way in is to work backwards from a goal. Ask yourself three questions:
- How many new customers or enquiries do we need this year to hit our targets?
- Roughly how much is a new customer worth to us, over their first year and over their lifetime?
- What could we reasonably afford to spend to win one?
If a new client is worth £3,000 a year and tends to stay for three years, spending a few hundred pounds to win one is easy to justify. If your average sale is £40 and customers rarely return, the maths looks very different. You don’t need perfect numbers. You need numbers you believe, written down, so you can test them against reality later.
Split your marketing budget into three pots
Once you have a total, stop thinking of it as one lump. Split it into three pots with different jobs.
Foundations
These are the things everything else depends on: your website, hosting and maintenance, your brand assets, photography, your CRM or email platform, and your Google Business Profile. Foundations don’t win customers on their own, but a weak foundation makes every other pound work less hard. If your website is slow, dated or confusing, fix that before you pay to send people to it.
Always-on activity
This is the steady work that runs every month: SEO, regular social content, email newsletters, review generation, perhaps a modest ongoing ad budget. Always-on activity is rarely exciting, but it’s where compound returns come from. Cutting it every time you’re busy is how businesses end up starting from zero twice a year.
Campaigns and opportunities
This pot funds the bursts: a seasonal promotion, a product launch, an exhibition, a local push when a new site opens. It also covers the things you can’t predict, like a competitor closing or a good sponsorship offer landing in your inbox. Keeping this pot separate means you can say yes to good opportunities without raiding your always-on activity.
There’s no fixed ratio, but a business with shaky foundations should put more there in the first year. An established business with a solid site and brand can shift more into always-on work and campaigns.
Map the year before you allocate the money
Get a calendar and mark out the moments that matter to your business. That includes your busy and quiet seasons, school holidays if they affect you, industry events, product launches, planned price changes, and anything else you already know is coming.
Now plan backwards from each one. Marketing for a busy season needs to start well before the season does. A summer campaign usually needs creative work done in spring. Christmas trade often needs planning in September or October. Your marketing budget follows the plan, so the months before your peaks will often be your heaviest spending months.
This is also where you’ll spot clashes. If your trade show, website relaunch and biggest seasonal campaign all land in the same six weeks, you’ll either need more help or a different schedule.
Cost things properly, including your own time
The most common budgeting mistake is costing only the invoices. A new brochure isn’t just design and print. It’s the time spent briefing, writing, approving and distributing it. An email newsletter isn’t just the platform fee. It’s the hours to plan, write, design and send it every month.
For each line in your plan, note:
- External costs: agency fees, freelancers, platforms, ad spend, print, venue fees.
- Internal time: who’s doing the work and roughly how many hours it takes.
- One-off versus recurring: a website build is a one-off, hosting and maintenance are not.
- Lead time: how far in advance the work needs to start.
If internal time is where the plan falls over, that’s useful to know in January rather than June. It might mean outsourcing a regular task so your team can focus on the work only they can do.
Hold back a contingency
Keep part of the marketing budget unallocated. Something will come up that you didn’t plan for, either a problem or an opportunity. A contingency lets you deal with it without cancelling something else halfway through.
If you get to the autumn and the contingency is untouched, you can put it into whatever has performed best. That’s a much better position than scrambling for money you don’t have.
A budget isn’t a promise to spend money. It’s a decision about where the money goes first, so you’re not making that decision in a hurry later.
Decide how you’ll measure each line
Every line in the marketing budget should have a way of telling you whether it’s working. That doesn’t have to be complicated. For paid ads, it might be cost per enquiry. For SEO, it might be organic traffic and enquiries from search. For an exhibition, it might be leads captured and how many turned into quotes within three months.
Set these measures before you spend, not after. It’s very easy to decide something worked once the money’s gone. Make sure the tracking is in place too: analytics on your website, call tracking if phones matter to you, and a simple way to ask new customers how they heard about you.
Review it every quarter
A yearly marketing budget is a plan, not a contract. Book a review into the diary at the end of each quarter and ask:
- What did we actually spend compared with the plan?
- What results did each line produce?
- What should we stop, keep or increase for the next quarter?
- Has anything changed in the business that affects the plan?
Give always-on activity time to work before judging it. SEO and content often take months to show results, while ads can be judged much sooner. Moving money around every fortnight based on thin data usually does more harm than good.
Your marketing budget checklist
Before you sign off the year’s budget, check you can tick every item below.
- We’ve written down how many customers or enquiries we need this year.
- We have a rough value for a new customer and a figure we’re willing to pay to win one.
- The budget is split into foundations, always-on activity and campaigns.
- Key dates for the year are on a calendar, with start dates worked backwards from them.
- Every line includes external costs, internal time and lead time.
- Recurring costs like hosting, software and retainers are listed separately from one-offs.
- There’s a contingency that isn’t allocated to anything yet.
- Each line has a measure of success and the tracking to support it.
- Quarterly review dates are booked in the diary.
- Someone owns the budget and is responsible for keeping it up to date.
Getting help with the plan
If you’d rather not build the plan alone, a good agency should be able to help you set priorities and cost them realistically, not just sell you whatever they happen to offer. Our marketing strategy work starts with exactly this kind of planning, and if you’d rather hand over the delivery too, an outsourced marketing department gives you a team working to the budget you’ve set.
