Marketing budget planning is the work of deciding what you will spend on marketing next year and why. The simplest way to start is to look at what you spent and what it earned this year. Then list your fixed costs, decide how to size the rest, set money aside for tests, and pick dates to review. This checklist walks through each step.
It is written for a business that sells to other businesses and has no big marketing team. You do not need special software. A spreadsheet and your sales numbers are enough.
Step 1: Review what you spent and what it earned
Start with facts from this year. Pull your marketing costs by channel and line them up with the sales that came from each one.
- List every marketing cost: ads, events, email tools, content, agency fees, website work and printed material.
- Match each cost to leads, deals and revenue where you can.
- Mark the ones you cannot measure. Some tactics, such as print ads or word of mouth, are hard to track.
The US Small Business Administration (SBA) tells owners to compare marketing and sales costs to the revenue they bring in, so they can see whether they are getting a positive return on investment (ROI). It also says to be consistent in how you measure results, even for tactics that are hard to count.
Sources: U.S. Small Business Administration, "Marketing and sales" (Business Guide)
Step 2: Split fixed costs from flexible ones
Some costs repeat every month and are hard to cut. Others can move up or down. Sort your list into these two groups before you pick a total.
- Fixed costs. Website hosting, software subscriptions, retainers and salaries. These come first, because they are already committed.
- Flexible costs. Paid ads, events, new content and design projects. These are the lines you can adjust.
The SBA makes a similar split for startup budgets. It asks owners to separate one-time expenses from monthly expenses, and it names advertising, marketing, market research, printed material and a website as common marketing lines. The same habit works for an established business.
Sources: U.S. Small Business Administration, "Calculate your startup costs" (Business Guide)
Step 3: Pick a method for sizing the budget
There are two common ways to set the total. Pick one on purpose rather than by habit.
- Prior-year baseline. Take last year's budget and adjust it up or down. The Corporate Finance Institute says traditional budgeting begins with the previous year's budget and adds or subtracts a percentage, usually 1 to 10 percent. It is quick, but it can carry old waste into the new year.
- Zero-based budgeting. Start at zero and justify every line again. Investopedia describes it as a method where all expenses must be justified for each new period. It can lower costs, but it takes much longer.
A practical middle path works for most small teams. Use last year as the baseline, then ask of each flexible line: if we had no budget for this, would we add it today? Keep the lines that pass, and cut or shrink the rest.
Sources: Investopedia, "Zero-Based Budgeting (ZBB)"; Corporate Finance Institute, "Zero-Based Budgeting"
Step 4: Reserve money for tests
A budget that only repeats last year cannot find anything better. Set aside a small slice for tests, and keep it separate from your core lines so a failed test does not hurt your base.
- Write each test as a short question, such as "Does a webinar bring more qualified leads than a paid post?"
- Decide in advance what result counts as a win.
- Set a fixed cap and a time limit for each test.
- Plan to move money from the weakest channel to a test that wins.
The SBA suggests a cost-benefit check for choices like this: add up the benefits, add up the costs over the same period, and subtract. Its example weighs $5,000 in new yearly profit against $3,000 in permit and equipment costs. You can run the same math on a test before you fund it.
Sources: U.S. Small Business Administration, "Manage your finances" (Business Guide)
Step 5: Write the plan and the full cost breakdown
Your budget should sit inside a short marketing plan. The SBA says most plans cover target market, competitive advantage, a sales plan, goals, an action plan and a budget. It asks for a complete breakdown of the plan's costs, as accurate as you can make it.
A simple budget table has these columns:
- Channel or project name.
- Fixed or flexible.
- Cost per month, and cost for the year.
- The goal it supports, with a number, such as new email subscribers or sales calls booked.
- The owner who answers for it.
Keep the goals tied to the budget. A line with no goal is the first one to question next time.
Sources: U.S. Small Business Administration, "Marketing and sales" (Business Guide)
Step 6: Set review dates and keep tracking
A budget is a guess until real numbers arrive. Put review dates on the calendar before the year starts.
- Monthly. Compare actual spend with the plan. Catch overspending early.
- Quarterly. Compare cost with results by channel. Move money away from lines that are not working.
- Yearly. Rebuild the plan from the year's results, using Step 1 again.
The SBA advises keeping track of costs once the plan is running, and says marketing plans should be maintained at least once a year. Measuring ROI shows which parts of the plan work and which need to change.
When you are done, you should have one page with your total, your fixed and flexible lines, your test money, your goals and your review dates. If any of those is missing, the plan is not finished.
Sources: U.S. Small Business Administration, "Marketing and sales" (Business Guide)
Sources
- U.S. Small Business Administration, "Marketing and sales," Business Guide, last updated October 31, 2024. sba.gov
- U.S. Small Business Administration, "Calculate your startup costs," Business Guide, last updated July 19, 2024. sba.gov
- U.S. Small Business Administration, "Manage your finances," Business Guide, last updated May 22, 2023. sba.gov
- Investopedia, "Zero-Based Budgeting (ZBB): Definition and How It Works." investopedia.com
- Corporate Finance Institute, "Zero-Based Budgeting." corporatefinanceinstitute.com