What do Small Businesses Spend Their Money on?

2 Mins read

A small business has many expenses and it can be not easy to know where to spend money. Such businesses may spend money on inventory, employee salaries, marketing, and other areas. Keep reading to learn about where small business spends their money.


Inventory costs an average of 26% of a small business’s yearly budget. This includes the cost of goods, shipping, and storage. A small business inventory can be more fragile and affected by changes in the market. In the event of delays, some businesses may have to spend money on expedited shipping to get their product to customers on time.

Inventory costs can also include the cost of labor for employees who work in the inventory, such as stockers and packers. These employees may need to be paid more money for their work because it is more difficult and time-consuming.

Employee Salaries

Low compensation and contract loopholes are two of the main reasons almost 50% of physicians leave their employers. With small businesses, companies spend an average of 30% of their budget on employee salaries. This includes wages, benefits, and taxes. Small business employee salaries can be affected by the size of the company. Additionally, businesses in certain industries tend to spend more on employee salaries. For example, small businesses that handle hazardous materials may need to spend more money on employee salaries due to the increased risk.


Small businesses spend an average of 5-10% of their revenue on marketing. It includes advertising, public relations, and social media. The marketing budget can vary depending on the industry. For example, businesses selling luxury items may need to spend more money on marketing to make a good profit.

Small business marketing is needed since they don’t have the brand recognition that larger businesses have. Additionally, small businesses may need to spend more money on marketing to reach their target market. 35% of customers find out about local businesses from seeing their signs while passing.


A survey found that 43% of construction firms spend between one and two percent of their revenue on software. This software includes enterprise resource planning (ERP) systems, project management software, and accounting software. Businesses in the construction industry need to spend money on software to manage their projects. Additionally, businesses may need to purchase software to keep track of their finances. Accounting software can help businesses manage their money and comply with taxes.


The average small business spends about 10% of its budget on rent. Rental fees include office space, retail space, and storage space. The amount spent on rent can vary depending on the size of the business and the location. Businesses in expensive cities, like New York City and San Francisco, tend to spend more money on rent. Additionally, businesses that require a lot of space, such as warehouses, may need a larger monthly rental budget

How Can Small Businesses Save Money?

One way is to negotiate with suppliers for better prices. Small businesses may be able to barter and exchange goods and services with suppliers in order to get a lower price. Additionally, businesses can save money by looking for discounts and government-backed loans or grants, especially for small businesses.

Small businesses can save money by reducing waste. Companies can reduce the amount of paper, energy, and water used. Additionally, businesses can recycle and reuse materials to save money. When it comes to hardware and software, it may be more cost-effective to buy used instead of new.

Small businesses need to be careful where they spend their money. They should consider the cost of inventory, employee salaries, marketing, software, and rent. Additionally, businesses should think about how much money they need to spend in each category to stay profitable.

Related posts

How Hollywood Business Managers Such as David Bolno Deal With Industry Changes

3 Mins read
Hey, fellow entertainment enthusiasts! In the world of Hollywood, business managers are the backstage heroes. They’re the strategic masterminds behind the scenes,…

Why Does A Rich Chicago Law Firm Keep Suing Indian Tribes?

3 Mins read
Editor’s Note: This article originally appeared in DC Journal: Why does a deep-pockets Chicago law firm keep targeting businesses run by…

Managing your Finances in a World of Inflation: Practical Tips for Adapting

2 Mins read
Over the past two years, we’ve all witnessed substantial price rises in many sectors, from food to gasoline to housing. Inflation has…
Power your team with InHype
[mc4wp_form id="17"]

Add some text to explain benefits of subscripton on your services.

Leave a Reply