Two thousand dollars, spent across about ten weeks, most of it coming back as information rather than customers. That is a defensible first-year number for a new business, and it is a flat amount because the advice you have been given, some percentage of revenue, needs a revenue to take a percentage of. Fifty-two percent of small businesses run monthly marketing budgets under $1,000 anyway 1, so a figure in that neighborhood is closer to what the market does than most planning templates are.
The framing matters more than the figure. A startup marketing budget in year one is buying answers to two questions: will anyone pay the price you picked, and where were they standing when they decided. Customers are the byproduct.
What $2,000 returns on a bad day
Run it against published numbers instead of hope. Our band for general home services puts a bought inquiry between $25 and $80 with a $45 median, and roughly 35% of those inquiries turn into customers, which you can check for your own trade in the lead cost calculator. Two thousand dollars at the median buys about 44 inquiries. At 35% closing, that is 15 customers.
Now the version where the assumptions bite. A brand new business has nothing behind the call, no reviews and no neighbor vouching for you, and an owner who has never quoted this work before, so 35% is optimistic in month one. At a 15% close rate the same 44 inquiries produce about 7 customers. If your market prices inquiries at the $80 end of the band, you get 25 inquiries and fewer than 4 customers. Anywhere from four customers to fifteen is a plausible result from the same $2,000, and nobody can tell you in advance which end you land on.
That spread is the whole reason to treat the money as tuition. Seven customers will not build a company. Knowing that inquiries in your market cost $45 and that you close one in seven of them cold is worth considerably more than the seven customers, because it tells you what the next $20,000 will do before you spend it.
Do not hire an agency in year one, and that includes us
A business in its first twelve months should not hire a marketing agency, ours included. Our cheapest tier is $1,850 a month on the services page, which means one invoice from us consumes the entire test budget and leaves nothing to advertise with. Any competent shop is in the same range, and the cheap ones charging $700 are not putting a senior person on a $2,000 account. There is no version of that trade that works in your favor.
There is a second reason underneath the money. What an agency is good at is making a working offer reach more people faster. Year one is when you find out whether the offer works, and that discovery happens in the prices you quote and lose and in the jobs that go badly. Outsourcing it means paying somebody to learn your business on your dime and then leaving with what they learned.
Only 34% of small businesses work with an outside partner at all now, down from 60% a year earlier 1. We walked through the thresholds where hiring starts to make sense in do I need a marketing agency. None of them arrive in month three.
So the first $2,000 goes two places. Half of it buys one page that states what you sell and what it costs, built well enough that a stranger can decide from it without calling you. The other half buys a narrow paid test on the single service you most want more of, in the tightest geography you serve, run by you, badly, while you learn what the search terms report is telling you. Both halves are cheaper in cash and more expensive in attention than hiring, and attention is what you have in year one.
The floor a management fee cannot get under
Below roughly $1,500 a month in ad spend, any competent management fee eats more than half of what you are spending, which our marketing cost calculator will show you against every option including hiring somebody yourself. At $2,000 spread over ten weeks you are nowhere near that floor.
Freelancers get pitched as the answer here and they are a partial one. Experienced hands bill $50 to $150 an hour, so a few hours a month of a good freelancer’s time is a real option at $600 that no agency retainer can match. What you are buying at that level is a second opinion and someone to fix your account structure once, rather than ongoing management. Be clear with yourself about which of the two you are paying for, because vendors are rarely clear about it for you.
The number to watch is the ratio, and it should embarrass you before it comforts you. Every dollar of management on a small account is a dollar not spent reaching anyone.
Nobody is cutting, so do not plan on a cheaper auction
Sixty-six percent of small businesses expect economic uncertainty to be a challenge this year, and only 8% plan to cut their marketing budgets 1. Nervousness is not producing retreat. The competitors bidding against you next spring will be the same competitors bidding against you now, at the same budgets or higher.
There is a more useful figure sitting next to it. Half of small businesses have nobody dedicated to marketing at all 1. The shop across town is not being out-executed by a team. It is being handled on Sunday nights by an owner as tired as you are. The auction will not get cheaper for you, but the people inside it are slow, and speed is available at any budget.
That is the competitive case for a first-year business in a trade, and it is the argument behind how we open accounts for home and auto services businesses. Answer the phone on the first attempt and put the quote in writing the same day. Neither costs a media dollar.
Write down the number you would stop at
Before the account goes live, put three figures on one line: the total you are willing to lose, the most you can pay for one inquiry and still make money, and the date you will look at both and decide. The ad spend calculator will produce the middle one from your own margins and your own close rate, and it returns a verdict that sometimes tells you not to advertise at all.
The reason to write them down first is that you will not want to write them down later. Two months in, with $1,400 spent and three customers to show for it, the mind reaches for one more month. Sometimes one more month is right. You cannot tell which time it is unless the stopping condition was set while you were still capable of being disinterested about it.
Set the date sixty days out and put it in the calendar with the two numbers in the description.