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We ask business owners: How much should SMEs spend on branding?

A brand represents a customer’s perception of a business and can represent the entire customer experience. Often when we think of a product, the first thing that pops to mind is a certain company’s brand, from Coca-cola to Apple.

Today, there’s a seemingly infinite number of brands for consumers to choose from. Small businesses are then presented with a tricky challenge: how do they make their brand stand out from the crowd?

Office design specialist Diamond Interiors often encounter businesses in the process of establishing or re-establishing their brand who want their offices to reflect their crafted identity.

“The businesses we’ve seen grow the fastest are those who have invested time and money into understanding exactly who they are and what their mission is,” says Nick Pollitt, founder and Managing Director at Diamond Interiors. “For smaller businesses, though, it can be tricky to strike the balance.

“When developing our own brand, we had to figure out how much of our marketing budget should be put towards branding and it was difficult to know exactly where to start. If you’ve never created a brand before, there’s no benchmark to work from, which can be scary.”

To find some answers, Diamond Interiors reached out to small businesses throughout the UK to ask for their answers to one important question: how much should SMEs spend on branding?

The importance of branding for SMEs

Prioritising your brand

“SMEs usually have more pressing expenses to deal with than branding,” says Grant van der Harst, Managing Director of road-marking company Anglo Liners. “They have to pay staff and buy essential supplies, first and foremost. After paying these expenses, small businesses rarely have much money left over to spend on marketing, advertising and promotion.”

But does that mean branding shouldn’t be a priority for SMEs? “Branding is important,” says Grant: “It’s one of the best marketing tools available to a small business. A good name and a memorable logo can really make a small business stand out, which helps attract local consumers and grow your popularity.”

Branding in different industries

It’s easy to believe that branding matters more for companies in a customer-facing industry — such as food and clothing —- than it might for a B2B company.

But Shaherazad Umbreen, founder and CEO at the ethical shoe design company Shoes by Shaherazad, believes that isn’t the case. “If you’re in a product industry, brand matters. If you’re in a service industry, brand matters. Brand must be leveraged in all industries now; it’s the personality of your business that connects you with new customers, whether you work in fashion or construction.”

The costs of branding

Grant van der Harst of Anglo Liners suggests that small businesses spend around 7-8% of their revenue on marketing. “Branding is an essential asset,” he says, “so it’s worth spending a sizable chunk of this budget on branding.”

For a business that’s creating their brand from the bottom up, there are three initial concepts to focus on:

  1. Your brand name

  2. Your brand logo

  3. Your domain name

Unlike with other key brand concepts (such as your mission statement or your core values), your brand name, logo and domain name all come with a fixed, associated cost.

So what do those initial costs look like for a small business?

1. Brand name

Even if you don’t yet have a logo, you’ll probably already have a brand name by now. And while you won’t necessarily need to pay for consultation on your brand name (although investing in the perfect name might be worth your while), you will need to copyright it.

“It costs between £200 and £300 to copyright your brand name,” says Grant. Al Black, Production Director and Manager of voiceover agency Voquent, says that their copyright falls within the same range. “We’re now in the process of getting our name trademarked,” says Al, “which is around £200 in the UK.”

You can apply for a brand trademark by visiting the UK government’s website.

Al also recommends choosing a brand name that’s easy to read, spell and recognise. “Look at Google, Facebook and Apple,” he says. “They don’t use fancy fonts or detailed illustration. I know many business owners who’ve spent thousands — sometimes tens of thousands — on their brand to no avail because they haven’t recognised the importance of first choosing a good name.”

2. Logo

Grant van der Harst recommends “spending £500-£1000 to design and buy a good logo.” Al Black of Voquent says that he used crowdsourcing site DesignCrowd to have around 50 logos produced. “The cost of creating our logo was about £300,” he says.

Ann Oldbury, Director at healthy fruit snacks company LioBites, got a more personal touch without having to incur massive costs. “Our branding and logo were created by me and my friend who is a freelance graphic designer,” says Ann. “It took us two days and a few email exchanges to produce six packet idea. The project overall cost me less than £1000, including the logo.”

Charlotte Sheridan, Director at SME-focused marketing agency The Small Biz Expert, warns against simply going for the cheapest option. “If you try to get super-cheap logos made on sites like Fiverr,” she says, “it’s often the case that they’re not original, or even — scarily — copyrighted elsewhere.”

3. Domain Name

“All businesses should start their branding with the domain,” says Al Black of Voquent. “If they choose a business name that has no available domain, or where the domain is only available as a premium purchase, it could end up being the biggest branding cost.

“Once we chose the name Voquent, we immediately bought the .com and domains since we intend to operate in the US and UK primarily.”

The exact price of purchasing an available domain varies. It can start from as little as £1 per year but a lot of then sit around the £30 mark. Still, it’s a small price to pay to secure that memorable, relevant URL.

Getting your money’s worth

If you want to mitigate the costs of branding without sacrificing the quality of the final output, there’s plenty of preparation you can do before paying for things like your brand name or your logo.

1. Nail your product or service first

One of the key ways to prevent inflated branding costs is to get your core service right before you see a branding consultant.

Marcus Franck, Co-founder at Smart Renewable Heat, says, “I would recommend that you nail your technical product or service market fit, and get clarity on business goals. Without a clear and proven business strategy, you cannot implement a solid brand-building strategy with confidence.”

2. Understand the mission of your brand

“Before I launched my shoe business,” says Shaherazad, “I spent a whole 12 months before launch working on the brand.”

She says that by spending so long thinking about her brand before launch, she was able to save a huge amount of money that would have had to spend on building her brand with a third party. “if you have a great imagination and vision then you won’t need to spend as much on building your brand approach than someone who is less creative.”

3. Be cognizant of the wider scope of branding

Your brand name and logo are important, but they only form the initial steps into your broader brand strategy. That means a lot of your branding budget should be reserved.

“Branding is essential as a basis for your identity and messaging,” says Marcus Franck of Smart Renewable Heat, “but the budget should be weighted in the direction of customer acquisition channels. At a time when budget and resources are limited, you need to focus on securing the bottom line.”

For SMEs, this means not spending too much time on visuals and instead focus on those activities that will generate revenue for future brand development. In the world of e-commerce, that means focusing on acquisition channels like search engine marketing and social advertising.

Making the best investment

When branding is done well, it can elevate your business to new heights. However, SMEs need a strong foundation to build upon; otherwise, they could end up overspending with branding agencies without a good return on investment, and find themselves in the red as a result.

With the right amount of preparation and understanding exactly what you need, you can build your dream brand without breaking the bank.


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