How to Scale Your Business by Using Your Marketing Budget More Wisely with Garrett MehrguthRead Time: 6 minutes


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Setting a Marketing Budget

When setting a marketing budget for your business, it’s important to make sure you use every penny wisely. This means not stretching your company too thin and not assuming your level of income. This may seem like a simple rule, but for many businesses, it’s difficult to execute correctly. That’s why we sat down with Garret Mehrguth of Directive Consulting.

In this episode, Garrett explains how to set a marketing budget that gives you the most bang for your buck, as well as the tips he wishes he knew when starting out in marketing.

So if you’re looking to outline a marketing budget that can help you reach your business goals, don’t stop scrolling.

The Importance of Setting a Marketing Budget

Every business owner knows they should set a marketing budget, but do you truly know why it’s important for your future success?

The data you use to determine your budget plays a HUGE role in your ability to scale effectively. In fact, if you choose to base your budget on assumptions of what you’ll be making, rather than on your historical revenue, you’ll be much more likely to eventually run out of cash.

Think of it this way: your marketing efforts should be bringing in money, NOT sucking your business dry. When you bank on future sales that may or may not come to fruition, you decrease your chances of achieving the revenue and growth goals you’ve set. This is because future sales are unpredictable. The market is always changing, and it’s impossible to plan for every potentiality. However, when you base your projected earnings, and therefore, your marketing budget, on the revenue you KNOW your business can generate, you maximize your ability to scale your company effectively.

If that still seems complicated, follow this simple rule.

Your marketing budget should be equivalent to 10 percent of the revenue you expect to generate in that same period of time. So if you’re planning your budget for an entire year, it should be equal to 10% of what you can solidly project you’ll generate in revenue that year.

Make sense? Here’s why.

What Garrett Wishes He Knew BEFORE He Started Marketing

When you’re a business owner, you can grow and want to grow, but if you do it too fast, you won’t be able to sustain it. If you can’t sustain the amount of velocity you’re striving toward, then it’s time to tone down your spending.

It may sound counterintuitive to grow by spending less, but in truth, it’s all about strategy. People often have an idea that once something “works”, they’ll increase its volume and spend anything. This isn’t the best approach to growth. In fact, the best approach is to actually raise rates while keeping your volume the same. Doing this enables you to bring in revenue without growing too fast.

Once you’ve grown your revenue intake to a level that allows you to invest more in your company infrastructure, you can begin to slowly increase the volume of your marketing efforts. Before you do, though ask yourself the following questions:

  1. What’s your average contract value?
  2. Do you have the ability to service new customers with the same level of care that you have been with current customers?
  3. Do you have the capital necessary to service your company’s infrastructure?
  4. How does your desired marketing budget compare to your historical revenue?
  5. Have you evaluated your historical revenue to determine what your marketing budget should be?

Once your answers to those questions are positive, you will be in a good place to begin increasing the velocity of your marketing efforts, rather than just your rates.

Don’t Make This Mistake

When deciding on your marketing budget, be sure to avoid making the mistake of blind ambition. This ties into the questions above, as no matter how good of a company you are, you simply cannot increase sales velocity without decreasing quality.

This means you must grow in ways that are sustainable and not reckless. There are two ways you can do that.

The first sustainable method is to become the best business for your price point. While you may not be the best overall, you will be able to compete against competitors who charge similar prices.

Your second option is to direct your budget toward scaling and becoming the best overall. To do this, you need to charge more, invest a lot of your revenue, and offer unique, strategic campaigns to customers.

Let’s get into how to do that.

Structuring Your Marketing Budget for Success

Structuring your marketing budget for success is a must if you want to grow sustainably. To do it, Garrett recommends spending more on customer marketing. Doing this will maximize your customer retention abilities and drive referrals, thereby increasing your long term revenue.

In fact, your most profitable campaigns, and the easiest ways to generate cash are referrals and upsells. Unfortunately, most companies don’t spend a large enough percentage of their overall marketing budgets on existing customers. Do this, and you’ll stand out like Nordstrom does from Nordstrom’s rack.

If you want to structure your marketing budget for success, you should also break down your funnel. Your timing, brand, and product marketing fit are the components that allow your marketing to be successful. When you replace the traditional marketing funnel with a top of funnel geared toward brand impressions and custom audiences, you see more success. This is because the number one problem businesses have is acquiring talent, NOT the new business.

So when you follow an impression-based strategy that has mass awareness and volume, you take away the typically high cost of lead generation because more people know about your company and products. This results in lower spending, increased revenue, and significant growth.

Simply put, when you lead with a brand and structure your marketing budget according to what you can handle, rather than what you WANT to handle, you’ll be able to grow that much more sustainably.


  • Become the Nordstrom, NOT the Nordstrom’s rack.
  • Referrals are your lowest cost per acquisition channel with your highest close rate.
  • Your company’s velocity of growth inversely affects customer retention rates, decreasing cash on hand.


  • Your marketing efforts should be bringing in money, NOT sucking your business dry.
  • Your most profitable campaigns and the easiest way to generate cash is through referrals and upsells.
  • The best way to grow is by raising your rates, not increasing volume.


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