How Much Should a Small Business Spend on Marketing?
It is one of the most common questions we hear from owners: how much should a small business spend on marketing? The honest answer is that it depends on your growth stage, margins and goals, but there are sensible benchmarks that stop you either starving your growth or pouring money into channels that do not pay back.
This guide gives you realistic percentages, a practical way to split the budget, and a simple method for landing on a number you can actually justify. No fluff, no pressure to spend more than you can afford.
The common rule of thumb
Most marketing experts suggest spending somewhere between 5% and 10% of revenue on marketing if you are an established business aiming to hold your position and grow steadily. Newer businesses, or those pushing for faster growth, often spend more, sometimes in the region of 10% to 15%, because they need to build awareness from a standing start.
So a UK business turning over 200,000 pounds a year that wants steady growth might budget roughly 10,000 to 20,000 pounds annually, or a little over 800 to 1,600 pounds a month. A business chasing aggressive growth might stretch higher. These are guides, not laws. Your margins matter enormously: a business with 70% margins can afford a very different spend to one running on 15%.
Start from goals, not percentages
Percentages are a useful sanity check, but the better starting point is what you actually want to achieve. Work backwards:
- How many new customers do you need this year?
- What is a customer worth to you over their lifetime, not just the first sale?
- Roughly how many leads convert into paying customers?
- What can you afford to pay to acquire one customer and still profit?
Once you know your target cost per acquisition and your goal for new customers, you can build a budget from the bottom up. If a customer is worth 500 pounds to you and you convert one in five leads, you have real numbers to plan around rather than a vague percentage.
How to split the budget
A common and sensible split is to divide spend between foundations, growth and experiments. There is no single correct ratio, but a starting point many small businesses use looks like this:
- Foundations (around half): your website, SEO, Google Business Profile, email marketing and the basics that work quietly in the background
- Growth (around a third): paid channels such as Google Ads and social ads that you can scale up or down based on results
- Experiments (the remainder): testing new channels, content formats or campaigns to find what works before committing more
The foundations are easy to underrate because they are not glamorous, but a slow, confusing website will quietly waste every pound you spend driving traffic to it. Fix the leaks before you turn up the tap.
Do not forget the cost of time
Marketing budgets are not only cash. If you or a team member spend ten hours a week writing posts, replying to reviews and updating the website, that time has a real cost. When you compare doing it yourself with hiring help or using tools, factor in the hours honestly. Sometimes a modest spend on the right software or a specialist frees up time that is worth far more elsewhere in the business.
There are also plenty of no-cost and low-cost moves that punch above their weight: keeping your Google Business Profile fresh, asking for reviews, and posting consistently on the one social channel where your customers actually are. You can explore some free tools to handle parts of this without adding to your budget.
Signs you are spending too little
Underspending is as risky as overspending. You may be under-investing if:
- You rely almost entirely on word of mouth and referrals, with no predictable pipeline
- Competitors consistently appear above you in search and social feeds
- Your website has not been updated in over two years
- You have no way to capture and follow up with interested leads
Signs you are spending too much (or badly)
Equally, more budget is not always the answer. Warning signs include running ads without tracking which ones produce sales, boosting social posts on impulse, paying for a channel because a competitor uses it, or having no clear view of your cost per customer. Spending with measurement beats spending on faith every time.
A simple starting point
If you want a straightforward place to begin, take your annual revenue, apply a percentage that fits your stage (nearer 5% if established and cautious, nearer 10% or more if you are growing hard), then divide by twelve for a monthly figure. Split that across foundations, growth and experiments, commit to tracking results for ninety days, and adjust. Marketing budgets should be reviewed quarterly, not set once and forgotten.
Spend where it counts
How much you should spend on marketing matters far less than whether that spend is landing on the right things. Before you increase your budget, it is worth knowing exactly where your current presence is strong and where it is leaking. Take our free brand audit to get a clear read on your website, SEO, social and reviews, so every pound you spend next works harder.