The Small Business Association recommends that companies with under $5 million in revenue should spend 7-8% of their revenue on marketing. This number varies by industry. For instance, remodeling companies might only need to spend 3-5% of their revenue on marketing. Companies in specialty trades, on the other hand, might need to spend a little more than average and allocate 8-12% of their revenue to their marketing budget. In this blog, we will outline more details about your marketing budget and how it should be spent.
In the video above, Spencer talks about the marketing budgets for home building, remodeling, and contracting businesses. How much should a marketing budget be? What should the marketing budget be allocated towards? For more videos like this, check out and subscribe to our YouTube channel!
Why Construction Companies Need A Marketing Budget?
A lot of contractors, remodelers, and home builders rely on word-of-mouth marketing, but that isn't reliable and sustainable long term. When word-of-mouth marketing and referrals slow down, it could make it difficult to find new business. We want you to ask yourself: are you charging enough for your projects to be able to even enough money for a healthy marketing budget? For instance, if you're only able to budget around 1% of your revenue for marketing, you might not be charging enough money for your work to have an adequate marketing budget. You might need to charge more so you can have a healthier marketing budget.
Where Should Construction Companies Spend Money on Marketing?
Once you have a healthy marketing budget in place, you're probably wondering what you should be spending it on. Here are some of the things that you should consider for your marketing budget.
Training or education
Salary for a marketing manager or agency
Your Marketing Budget Based on Your Goals
You should be basing your marketing budget on the goals for your revenue rather than your current revenue. For instance, if you are at $1.5 million in revenue but want to reach $2 million, you should base your marketing budget on the $2 million goal. With that $2 million revenue goal, budget 4% of it for marketing. This would give you $80,000 for your marketing budget. Here is a sample breakdown of how you could allocate your marketing budget:
Example Annual Construction Marketing Budget
Website Marketing (Content, Blogging, Social Media, SEO, Videos): $40,000
Marketing Software: $5,000
Branded Apparel: $1,000
Truck Wraps and Signage: $5,000
Client Gifts: $2,000
Other/ Miscellanious: $4,000
You can modify this list based on what you've done in the past or what you're currently doing. What results have you been seeing in each of these categories? If you've seen positive results in one of these categories, you might want to allocate more money to that area. If you have not been seeing great returns from some of these areas, you could think about decreasing the budget in that area. Overall, make sure that you are tracking the money that you spend in each area, and the returns that you are receiving from each area to evaluate how you should adapt your marketing budget over time for your company.
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