Sales and Marketing for Startups: What To Spend and When

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Both sales and marketing for startups face unique challenges: limited budget, the need to build demand and prove ROI, and much more. 


That’s why, as a startup, it’s critical that you’re fully aware of your budget and resources, and understand how to best use that information to make marketing decisions. Some like to say the magic answer is 11% of revenue but I think it is more complicated than that. 


It can be confusing for a new company to determine just how much to budget for sales and marketing. To begin calculating how much to budget for your marketing efforts, you first need to identify your gross revenue. This will help you to understand the available funds for your outreach. 


Once you have this figure, you can begin to maximize your spending, with your marketing goals in mind. According to a recent survey, the average marketing budget for startups is 11.2% of overall revenue. Ultimately, you need to spend enough to build brand awareness and start attracting leads, so the overall answer will depend on your company and your solution.


You might also need to consider your industry, your buyer, and your competition in the market. Each of these elements can influence your overall sales and marketing budget for a startup. 


So, how can you begin to build an accurate sales and marketing budget?

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Once you identify your company’s total revenue, you can begin to break down the costs within that. Think of key elements that will require spending naturally as your business grows, and what resources you’ll need to ensure sustained growth. Use a template or spreadsheet to collate all that information in a palatable format. 


Include factors like:

Marketing Goals – The first step toward marketing budget allocation is determining your marketing goals for the year. Both sales and marketing for startups are different from conventional marketing. In startups, you often need to use marketing to test messages, and learn about your market before pushing big campaigns. It’s critical to take the time to think about these goals before you start. 


Technology – Consider the base technology you need to implement for sales and marketing success. These might include software to build and maintain a product or service page, or marketing automation.


Research – If you don’t know your target audience yet, you may need to invest in market research. Surveys and questionnaires cost money, and carrying out valuable research takes time.


Automation – There are services to automate many of the basic marketing processes for you, such as organizing leads and website management. This can be beneficial to businesses that don’t have the resources to spend money on extra hands to complete projects.


Production – Note any expenses for what you will need to create marketing content, especially visually rich content. This includes graphic design, photography, or videos. 


Paid Advertising – If you’re planning to run ads, include these costs in your marketing budget. Paid ad costs are continuing to rise, and ROI is decreasing. While it’s important to have an ads budget, consider what amount is really viable for your marketing team.


Branding – These assets are the face of your company – so it’s important to get them right. From logo design and visual identity to brand positioning and story, business cards, sales collateral, and website design. You’ll likely need an in-house graphic designer, or you’ll need to spend on an agency. 


Content Marketing – Your startup marketing budget should allocate for the design and creation of content to be delivered. This includes blog posts, case studies, videos, and images. You also need to use SEO tools. Content marketing can take time before real results are visible – but it is a staple in any marketer’s arsenal. 


Prepare for the unexpected – Unexpected issues always arise in the first stages of a new business. Things break, don’t perform as expected, or require more time investment than planned. When you calculate your budget, ensure to set aside an SOS amount for these costs.


Once you have outlined your expected costs, it’s now time to optimize. Consider which elements will need the most budget, and how you can ensure that your budget is split fairly across each element. These decisions should be based on your sales and marketing goals. 


Working from your business goals will help you make guided budgeting decisions. Bear in mind that you may not need to factor all of the above expenses into your budget – or, you might need to factor all of them. It will depend on what your business needs are.

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What is Your Cost Per Customer?

To understand the success of your marketing, you need to know how your marketing is performing and the ROI of your campaigns. Your cost per customer indicates how well your marketing is influencing your desired customer, and how much you should expect to spend on each sale. This should help to contextualize your marketing and sales overall. 


To work out your cost per customer, take the cost of your sales and marketing over a period of time. Then, divide it by the number of customers acquired during that period. By taking this data-driven approach to your marketing spending, you’ll be able to make better decisions and determine your marketing ROI.

Maximizing Your Sales and Marketing Budget

startup sales and marketing growth

Determining a marketing budget for a startup is all about balancing cash flow with the need to grow. There are a few strategies that can help you get more from your budget.

Choose Expenses Wisely

Building your business is always going to be expensive, but some costs are more important than others. Commit to spending on what your business needs, first. Having a clear line for necessary expenses helps ensure you spend when appropriate and can optimize budget when you need to.

Embrace Analytics

To be sure that you optimize your budget, it’s handy to have the help of smart tracking tools. Make sure you use traffic, conversion, and lead monitoring tools. This will help you identify areas of your marketing that aren’t performing well, areas that need to be tweaked, and the ones you’re already excelling.

Assess Each New Marketing Strategy

Evaluate how your business will produce profits before investing any money into your idea. Make sure that each marketing strategy has a provable ROI – this ensures that your spending doesn’t go wasted. Some examples of effective marketing strategies in the current challenging economy include:

  • Affiliate marketing: Affiliate marketing can be an extremely successful marketing strategy, especially for startups. When you’re looking to test your messaging and your target audience, content marketing can be too slow. Affiliate marketing ensures your marketing is in front of the right audience, straight away. Paid ads are increasing in price exponentially, and losing ROI. Affiliates that perform are a far better way to optimize your budget. 
  • Content marketing: While it’s noted that content marketing takes around 6-9 months to provide results, it’s also one of the most cost-effective marketing strategies. As a startup, budget optimization is essential, and your content can back up a variety of marketing approaches, including inbound, outbound, and paid ads. 
  • SEO: Ultimately, SEO is free. You might need to budget for some effective tools, like SEMrush or Ahrefs, but uploading good quality, optimized content costs nothing. Make the most of your website with effective SEO. 

Keep Your Budget Updated

Your budget is just a forecast. It should be regularly updated throughout the year and whenever there is a shift in the market. You need to revisit it and make updates, especially once you have more accurate information from your spending throughout the year. 

The Sales and Marketing Process for Startups

Sales and marketing for startups require that you build a detailed budget that is designed to meet your goals. 


Your marketing budget keeps track of your expenses and allocates funds towards essential resources. It also enables you to plan for the future based on campaign goals and overall performance.


Rather than thinking of marketing costs as an expense, they should be considered an investment. Effective marketing spending will help your customers to find your business, and is your prime lead generation tool. 


To make sure your spending is under control, having a sales and marketing budget for a startup is essential. Your budget gives you the reassurance that you won’t put the company at risk with any marketing decisions, and keeps your spending on track.


Nituno knows just how important marketing is, but how strict spending needs to be in the current climate. We’d love to hear from you if you need advice on developing your marketing strategy. Get in touch with us today to discuss sales and marketing for startups!

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