3 Questions to Ask Yourself When You're Deciding How Much to Spend on Branding

It’s very easy for branding to get swept under the rug and forgotten about, especially when you have a million other things to prioritize when managing your small business. When you make the decision to begin the branding process, you’ll want to set a budget, but make sure you’re not spending too little on branding either. Improper funding for your brand could prevent you from standing out amongst your competition, or not allow your business to reach its full potential (New Kind).

For most entrepreneurs, starting up a small business means you have very little leeway when it comes to your spending. You know what’s important for your business to thrive, but you’re not sure how to achieve this in a way that’s affordable.

So how do you set a branding budget that’s right for you? Well, there isn’t one answer. Just like any other budgets you may have for your small business, a branding budget is different for everyone.

Here are 3 questions to ask yourself when you’re deciding how much to spend on branding:

#1 Who is my target audience?

Knowing who your ideal customer is will help you decide how much you should spend on branding. For example, if your audience is your local neighborhood, you don't need to spend as much because they'll more easily hear about you and trust you. But if you're trying to build an e-Commerce brand online and have strangers come to you, you need to spend more to appear credible.


I worked at my local neighborhood deli on Staten Island last summer for the same reason everyone I know shops there; it’s on my block. It was dirty, it was smelly, their shelves were stocked with expired foods at insanely high prices, but it was always crowded. When you’re in desperate need of milk at 5am to have your mandatory morning coffee, you’re not going to drive to Stop n’ Shop to save a few bucks. You’re going to walk down the block, weave through the cartons of expired dairy products, and waste $5.50. If you’re a local deli, it doesn’t matter what you look (or smell) like, people are going to buy from you purely out of convenience. Deli’s don’t need to spend on branding.

A national clothing line on the other hand, needs to shed some major bucks to invest in a brand that will speak to shoppers around the country. Like most girls my age, I shop at Forever 21 for two reasons: their clothes are cute and cheap. I’m a perfect example of Forever 21’s target audience; I’m young and on a budget.  If they hadn’t built a trendy brand that speaks to me, they would lose me, my fellow millenials, and a whole lot of money. They needed to spend a lot of money to make sure their brand is fresh for my generation.

#2 How much competition is my particular business facing?

How big is your pool of competitors? Knowing where you stand amongst your competition will help determine how much you need to spend on branding. Facing greater competition from a smaller amount of contenders, may mean you need to spend a little more to ensure that you will stand out in a sea of familiar and trusted faces. Be sure to research your main competitors, and take notes on the quality of their logos and websites. Then, you can figure out what you need to do to stand out, and spend your money accordingly.

#3 What is my current revenue?

The SBA recommends that most startup small businesses should only allocate 7-8 percent of their revenue to marketing. Part of your marketing expense should be brand development costs, such as websites, blogs and other promotional channels (Go Big Creative Lab). You need to be aware of how much income your business produces in order to determine a healthy amount of funding you can set aside for branding purposes. When you’re just starting out, it’s wise to prove the viability of your business (read: make sales!) before investing a huge amount into branding. You can get by in the beginning with a good logo and a strong name. Once your business is bringing in a healthy revenue, make sure you continue investing in marketing and branding so you can continue to grow.

Bottom Line: Branding expenses are not the same for every business.  Every business should start off with a strong name, a professional logo, and a sense of who your target market and value proposition is. For a local or referral-based business, that investment may sustain you for a long time. When you’re ready to expand or face serious competition, it’s time to take branding seriously and invest in building a brand identity that can help you meet your business goals.

Questions? Leave a comment below!

Alicia GalanComment