How Much Should a Small Business Spend on Marketing?

If you've ever stared at your bank balance wondering whether you're spending too much on marketing — or not nearly enough — you're not alone. Most small-business owners get no clear answer to this question. They hear a number from one place, a different number from another, and end up guessing. This guide gives you plain, honest benchmarks and, more importantly, a way to think about the spend so it actually pays off.

What percentage of revenue should a small business spend on marketing?

A common rule of thumb is 7% to 10% of your gross revenue for established businesses, and closer to 10% to 12% if you're trying to grow quickly or you're in a competitive market. If you're brand new and building awareness from scratch, you may spend more in the early months.

But treat these as starting points, not gospel. A local trades business with steady word-of-mouth referrals doesn't need the same budget as an online retailer fighting for search rankings. The right number depends on your margins, your growth goals, and how much of your sales already come from repeat customers.

What actually counts as marketing spend?

People often underestimate their real marketing costs because they only count the obvious things. A fuller picture includes:

• Your website — hosting, updates, and the work needed to keep it fast and useful
• Advertising — paid search, social ads, print, or local sponsorships
• Content — blog posts, photography, email newsletters
• Tools — email platforms, booking systems, analytics
• Your time — the hours you or your staff spend on marketing tasks are a real cost, even if no invoice changes hands

When you add it all up honestly, you can judge whether that 7–10% figure matches what you're really doing.

Where does the money get wasted?

The biggest waste isn't overspending — it's spending on things you can't measure. If you're paying for ads but sending people to a website that's slow, confusing, or hard to buy from, you're pouring money into a leaky bucket.

Before you increase your ad budget, it's worth making sure the destination works. A well-built site that clearly explains what you do and makes it easy to get in touch will stretch every marketing dollar further. That's often where a smaller, smarter investment beats a bigger, scattered one. If your current site is quietly costing you sales, our guide on turning website visitors into customers is a good place to start.

Should I spend on marketing or on my systems first?

This is the question we get most, and the honest answer is: it depends on where your bottleneck is.

If plenty of leads come in but you lose them because you're juggling spreadsheets, missing follow-ups, or quoting slowly, then more marketing just adds pressure to a system that's already struggling. In that case, fixing how you handle enquiries and jobs delivers a better return than buying more ads.

If your operations run smoothly but the phone isn't ringing, marketing is the right investment. The trick is being honest about which problem you actually have — and not spending on visibility when the real issue is what happens after someone contacts you.

How do I know if my marketing is working?

You'll know it's working when you can answer three plain questions:

• Where do my customers come from? If you can't say, you're guessing.
• What does a customer cost to win? Total spend divided by new customers gives you a rough figure.
• What is a customer worth? If a customer is worth far more than they cost to acquire, spend more. If not, fix the leak before adding fuel.

You don't need complicated dashboards to start. A simple habit of asking new customers how they found you, plus basic website tracking, will tell you most of what you need.

What's a sensible way to start?

If you're unsure, start small and measurable. Pick one channel, set a modest monthly budget you'd be comfortable losing, and track the results for a few months. Reinvest in what works and cut what doesn't. Marketing spend should grow with the evidence, not with the hype.

And before you spend on getting more traffic, make sure your website earns its keep. A clear, fast, easy-to-use site is the foundation everything else rests on — you can get a rough sense of what that involves with our no-obligation project estimate.

A no-pressure next step

Every business is different, and there's no single right number. If you'd like a clearer view of where your money is best spent — marketing, systems, or your website — we're happy to take a free, no-pressure look at your situation and give you a straight answer in plain English. No pushy sales calls, no jargon, just useful advice. You can tell us a little about your business whenever you're ready.