When you’re running a business, it’s easy to get caught up in the day-to-day tasks and forget to step back and look at the bigger picture. But if you want to grow sustainably, two areas should always be at the top of your priority list: operations and advertising/marketing.
These two pillars work hand in hand; operations keep your business running smoothly, while marketing and advertising bring in the revenue that fuels future growth. Here’s how to budget for both.
1. Start with a List of Operational Needs
Operational costs are the behind-the-scenes essentials that make your business function. They’re not glamorous, but without them, you can’t serve customers effectively or grow your business.
Start by listing the tools, systems, and services you need to operate efficiently. Then, decide how much you can reasonably allocate to each based on your available funding.
Examples of operational expenses include:
- Laptop or desktop computer
- Software (design, inventory management, scheduling tools)
- Hardware (printers, label printers)
- Packaging and shipping supplies
- Stationery and office supplies
- Website maintenance and SEO enhancements
- Monthly and annual subscriptions
- Business registration renewal fees
- GTIN barcodes (for retailers or marketplace listings)
- Accounting and bookkeeping software
- Continuing education or business workshops
- Product R&D and expanding product lines
- Consulting services or administrative support
- Marketplace fees
- Business savings account contributions
By clearly identifying your operational needs, you avoid wasteful spending and make sure the basics are covered before anything else.
2. Set Your Marketing and Advertising Budget
Your marketing budget will depend on:
- How aggressively do you plan to promote
- Which channels and platforms do you use
- The types of advertising you pursue
While some experts recommend setting aside 20–30% of your budget for marketing, this is not a one-size-fits-all rule. A more accurate approach is to base your budget on:
- Your industry
- The current economic climate
- Your business goals
- How long have you been in the market
- Your organic sales performance
- Your sales channels
Research the cost of each marketing activity you’re considering so you can plan for the year ahead.
3. Be Strategic About Inventory Planning
Inventory levels should be guided by marketing strategy and sales channels. Before you order, ask yourself:
- How much inventory can I afford at this time?
- How long will it take to sell out?
- What’s the minimum order quantity (MOQ) for wholesale?
- What’s my average order size from my website or other marketplaces?
If you plan to sell heavily across D2C, B2C, and B2B channels, inventory should match the demand you expect from that outreach.
4. Understand the Range of Marketing Options
The marketing world offers endless possibilities, but not all are worth the investment, especially for small businesses.
Common advertising and marketing strategies include:
- Wholesale and brand partnerships
- Google Ads
- Social media advertising
- PR services and product placement
- Podcast features or sponsorships
- Pop-up shops and local events
- Advertorials in digital or print publications
- Website banner ads
- Influencer collaborations
- Email marketing and newsletters
- Gift guide placements
- TV commercials or local cable spots
- Outdoor ads (billboards, transit ads)
While platforms like Google Ads, social media ads, and influencer marketing are often popular in marketing plans, they can be costly with very little to no return on those investments. For this reason, I do not recommend that small businesses invest in social media ads, Google Ads, or paid influencer marketing. For most small businesses, a good use of funds is to advertise where customers are already shopping—such as marketplaces: Etsy, Amazon, or Walmart.com. Invest in advertorials for publications and media outlets, e-newsletters, and gift guides that speak directly to your audience. Pitching for press features is also a highly cost-effective way to increase brand awareness, exposure, and credibility.
The Bottom Line
Before spending a dime, create two lists:
- Operational need: the must-haves to run your business efficiently
- Advertising and marketing strategies: the targeted efforts that will generate sales
Research the cost of each item or service on your lists. It will give a clear picture of your total funding needs and ensure your budget is realistic, intentional, and aligned with your goals.
When you focus on operations and marketing first, you’re not just spending money—you’re building the foundation for long-term growth.
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