ASK ALAN: My startup has a $500 marketing budget, so how should I spend it?

- September 15, 2021 3 MIN READ
Photo: AdobeStock
The truth is, $500 is not going to get you very far on most marketing platforms.

Unless you’re incredibly lucky you’re not going to guess correctly the first time you experiment with the variables of [creative]+[placement]+[time]+[advertising channel] and it isn’t enough marketing budget to run even one A/B test and get some conclusive results.

But, instead of thinking about using your marketing budget to acquire customers, what happens if you think about using it to acquire more marketing budget? It’s not a magic bullet but it’s better than nothing.

Here’s my thinking…

If you spend your $500 marketing on generating cashflow for your startup it’s going to get you nowhere. But if you can get your $500 marketing budget to create a $550 marketing budget, maybe you have the beginnings of a tiny marketing growth machine?


Growing marketing budget is easy enough to if you don’t spend customer revenue on running your startup and instead spend it on getting more marketing budget. You do this by making sure you firewall your revenue to spend on marketing, and by making sure the lifetime value of the customers you acquire for $500 adds up to more than $500 once you deduct what you spend on acquiring them.

We grow a marketing budget if (1) we use the cashflow to do more marketing, not spend it on salaries and expenses; (2) we make sure the lifetime customer value of each customer is greater than what it cost us to acquire each customer. So don’t think “how can I acquire all the customers I need for $500?” think instead “How can I use this $500 to give me $510?” It’s the difference between a “glass half-empty” and a “marketing tap half-on” mindset.


Budget-constrained marketers, founders new to marketing, or marketers who come to startups via industries with bigger budgets, all tend to focus on not spending their marketing budget.

A marketing budget is something you should spend! Stop worrying about reducing your CAC and start thinking about how to make your LTV greater than your CAC and you have the opportunity to build an unlimited marketing budget. 

Instead, think about the three ways you might be able to increase the rate at which you can grow your marketing budget.

Instead of worrying about CAC, think, “How can I increase my LTV?” and “How can I reduce the time it takes to earn back my CAC?” and “How can I make another $500 to spend on answering those first two questions?”

Marketing budget doesn’t have to be generated from revenue. Your startup is not the only way you can make another $500 to spend on marketing. Here’s some obvious ways you could make another $500 marketing budget in a few hours.

How do you make another $500 to spend on more marketing experiments to achieve this? On an average Sydney barista wage, you’d have to work about 25 hours. On an average Sydney Uber hourly rate, you’d have to work about 20 hours. I’m not suggesting you have to do this forever, but if you need another $500 to spend on marketing, there is always a way.

Now, I’m obviously simplifying things. There are a lot of other factors at play.

But with $500 you will have everything you need, if you cultivate the mindset of “how do I grow my marketing budget” instead of “how to I avoid spending my marketing budget?”