Small business: How to Advertise

Understanding the term: When is a business “small”

Small business is privately-owned and operated business with relatively small turnover and staff numbers. These numbers can vary by industry, region, revenue, market share, number of employees, tax credit qualifications and so on.

They are maybe considered small but they have significant role by representing 99.7% of all businesses in US, as well as 48% of US employees, 99 % of all enterprises in all EU countries. They account for around two-thirds of total employment, ranging from 53 % in the United Kingdom to 86 % in Greece.


Everything starts with a dream. If it’s sounds good enough, you’re converting dream into goal. Be honest with yourself,  what goals do you want to set for the company? To be better at service? Are your goals social – giving back to the community? Profit increase? Or you want to expand the company through new employees or brand awareness for instance?

Target your audience

Have you heard the term -If you’re selling to everyone, you’ll sell to no one- ?

You’ve set the goal, it’s time to conduct market research. Don’t assume who’re your potential clients, or how they behave. In this digital world everything is measurable by numbers, so get to know yours. Just by simple post on any social media you’re able to find out the number of unique accounts who saw your post, who saved, commented, liked, their gender, age range, location, average time of their activity on your profile (days and hours). Basically everything. This will help you determine who and how to approach.

Advertising Budget

At this point, you’re aware of your goals and audience. For a small business word-of-mouth is really good, but it will not get you far. It’s time for the money talk.

Where to start? First calculate your minimum and maximum allowable advertising budgets.

Based on Entrepreneur, you should take 10 and 12 percent of your projected annual, gross sales and multiply each by the markup made on your average transaction. Deduct your annual cost of rent from the adjusted 10 and 12 percent of sales number. The remaining balances represent your minimum and maximum allowable ad budgets for the year.

Calculating your budget

Let’s assume that your business is projected to do $2 million in sales this year, with a profit margin of 35%, and rent of $30,000 per year.

As we said take 10 and 12% of sales from 2$ million, which is $200,000 and $240,000, respectively.

How to convert profit margin into markup? Divide gross profits by cost. Dividing $700,000 (gross profits) by $1,3 million (hard cost) shows us that a 35% margin represents a markup of 53.8%.

Now we multiply $200,000 and $240,000 with our markup (53.8%), and we get $107,600 as adjusted low and $129,120 as adjusted high budget for total cost of exposure. From each of these two budgets, we now deduct our rent ($30,000). This leaves us with a ad budget that ranges from $77,600 on the low side to a maximum of $99,120 on the high side.

Predictions for 2020

Based on our research in the last 5 years (from 2012), marketing budgets remained consistent or increased compared to the previous year for at least 80% of companies. This trend is here to stay.

Consider mobile advertising, email and content marketing as your prime investments. Be aware of social media. According to recent research more then 50% of consumers said they followed brands on social media to browse products for sale, so develop strategy for product demonstration videos and gift ideas. Live video content will be bigger then ever, so discover how to focus all eyes on your companies live streaming.

Do it smartly

Are you following current Wendy’s promotion? This is a free social media commercial for a Wendy’s by a guy called Carter Wilkerson, who asked them on twitter how many retweets for a year of chicken nuggets? They said 18 million which is 6 times more then record holder famous Ellen DeGeneres. Wilkerson is currently at 3.1 million and gaining. At the end of the day, consider who will gain popularity.