Short YouTube video (Hey, Sabri series) in which Sabri Suby answers a viewer’s question about setting a marketing budget. Recommends starting with the desired lifestyle and working backwards to determine how many clients you need, using client lifetime value (LTV) as the basis for budgeting (spend roughly 30–33% of LTV on acquisition). Advises keeping six months of cash reserves for overhead and reinvesting remaining funds into paid advertising to scale growth.
Chapters
Hey, guys. On this week on hey, Sabri, I'm going to answer Mahad's question on how can you determine a marketing budget based on any size business company? Well, look, my outlook on this is different from most, you know, typically I don't, I don't know what size revenue that you're doing, and that's going to constantly change. So either I look at the things, you know, that, that I can basically determine based on any outcome is really that you should be spending, you know, 33% odd, give or take of what a life the lifetime value of a client is worth to you on acquiring that customer. And really, you want to start with the end in mind. You want to think about, you know, what kind of lifestyle are you trying to achieve and how many clients are you going to need to get in order to achieve that lifestyle. Right? And then work backwards from that. You might say that like, you know, in order to achieve your lifestyle, you're going to need to get three clients per month. Then basically what you want to do is, is simply look at, okay, this is how much those clients are worth to me. I'm going to spend 30% of what they're worth to me to acquire them. And that's going to dictate how much you spend on marketing per month. And really, you know, once your business starts to get some motion and you start to get some momentum, I'm big on having, you know, six months of cash reserves to be able to pay all your overheads, your staff, the salary and everything like that in the bank as a safety reserve. And then everything else should be poured back into marketing and be poured back into the machine and really growing this thing and scaling it up. Because there is no other investment vehicle that I have ever found that can give you the same return as paid advertising can. And that's really what is the grease on the wheels and keeps your business moving forward and helps you go to your target. So there's some kind of quick rule of thumb in terms of how much you should be spending on marketing and paid acquisition. Hey, guys, if you enjoyed this video, make sure that you click the like button and subscribe. We're dropping a video on YouTube every other day, and if you've got any questions about any of the content that I covered in this video, just basically leave a comment with heysubree in the comment section. And every week we're also trying to through all those questions and get them answered. So go ahead, click subscribe, and we'll see you on the next video.
