A new venture is preparing a budget for their marketing strategy and forecasted revenue is $500,000. How much should the company set aside for the marketing budget?
What will be an ideal response?
As a startup the entrepreneur should consider a marketing budget somewhere between 12 percent and 20 percent (recommended by the Small Business Administration) of projected revenue or sales. So, with $500,000 in sales, the company should expect to spend about $60,000 to $100,000 on marketing.
$500,000 X .12 = $60,000 and $500,000 X .20 = $100,000
It is stated in the text that the SBA also recommends a budget of 7-8 percent of projected revenue for ventures that have less than $5 million in sales. If these percentages are used, then the company should expect to spend about $35,000 to $40,000 on marketing with $500,000 in projected revenues.
$500,000 X .07 = $35,000 and $500,000 X .08 = $40,000
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