The honest answer to "how much should a small business spend on marketing?" is: enough to reliably bring in the customers you need, and no more than you can track and learn from. There is no magic figure that suits every business. A new gym, an established plumber and an online shop will all land on very different numbers.
What you can do is use a method. In this article I will walk through three simple ways to set a budget (a percentage of revenue, working backwards from a goal, and test and scale), with a worked example you can copy. We will also look at how to split your budget between channels, the difference between fees and ad spend, and what it can cost to do nothing.
If you want local price guides alongside this, our article on digital marketing costs in Tunbridge Wells covers what different services typically cost.
Why there is no single "right" number
You will see plenty of rules of thumb online. Some say spend a small slice of your turnover, others say spend more if you are new or growing. These rules vary a lot depending on who you ask, your industry and your stage of business, so I would treat them as a starting conversation rather than an answer.
Your budget should depend on a few practical things:
- How much a new customer is worth to you. A customer who spends £40 once is very different from one who spends £600 over a year.
- Your profit margin. It is what is left after costs that pays for marketing.
- How fast you want to grow. Steady and cautious needs less than ambitious and quick.
- How much capacity you have. There is no point filling the diary if you cannot take the work on.
- How much marketing you already have in place. A business with no website or Google profile has more catching up to do.
Three ways to set your marketing budget
1. A percentage of revenue
This is the simplest method. You pick a percentage of your turnover and set that aside for marketing each month. For example, if your business takes £15,000 a month and you choose 8%, your budget would be £1,200 a month.
The upside is that it is easy to plan and it scales with your business. The downside is that it can be a blunt tool. If sales are slow, a percentage of a small number is a small budget, which is often exactly when you need marketing most. It also does not tell you whether the money is actually working.
I would use this method as a sense check, not as the only way to decide.
2. Goal-based: work backwards from what you want
This is the method I like best for small businesses, because it ties your spend to something real. You start with the result you want and work backwards.
- Set a goal: for example, 10 new customers a month.
- Estimate how many enquiries you need: if you turn about 1 in 2 enquiries into customers, you need around 20 enquiries.
- Estimate what an enquiry costs: this is the tricky bit, because it depends on your market and channel. If you do not know yet, make a cautious guess and treat it as something to test. Our guide to how to calculate cost per lead shows you how to work it out once you have data.
- Multiply it out: enquiries needed multiplied by cost per enquiry gives you a rough ad budget.
- Check it against customer value: if the money you spend is comfortably less than the profit those customers bring in, the plan makes sense.
3. Test and scale
If you have never run paid marketing before, you simply do not know your numbers yet. In that case, start with a modest, fixed test budget for a set period, such as two or three months, and track everything. Then increase spend only on what is clearly working.
A good real example is Halo Gym in Tunbridge Wells. Their Meta Ads (Facebook and Instagram) 50% off campaign used £474.59 of ad spend and brought in 100 membership enquiries and 49 new paying members. That works out at about £4.75 per enquiry and £9.69 per new member, with a 215% advertising return. That is a result for one gym and one offer, and results vary from business to business, but it shows why testing with a clear offer and proper tracking is so useful. You can read the full story in the Halo Gym Meta Ads case study.
A worked example (hypothetical)
Imagine a dog grooming salon in Kent. An average new customer visits regularly and spends around £600 over a year, and the owner makes a healthy margin on that. She wants 10 new regular customers a month.
- She converts about 1 in 2 enquiries into customers, so she needs around 20 enquiries a month.
- She guesses an enquiry might cost around £15 through paid ads (this is an assumption, to be tested).
- 20 enquiries at £15 gives an ad budget of roughly £300 a month.
- She also pays for help managing the campaigns, say £450 a month.
Her total monthly investment is about £750. If the plan works and she wins 10 new customers worth £600 each over a year, that is £6,000 of customer value for each month of marketing. If it only works half as well, it may still pay off. If it works badly, she will know within a few months and can change course before spending much.
These numbers are made up for illustration, and your own will differ. The point is the method: a goal, a rough cost, and a way to check it.
How to split your budget between channels
Once you have a total, you need to decide where it goes. The common mistake is spreading a small budget thinly across five channels, so none of them gets enough to work properly.
A sensible approach for most small businesses is:
- Cover the basics first. A clear website that turns visitors into enquiries and a well-kept Google Business Profile (the listing that shows on Google Maps) cost relatively little and underpin everything else.
- Pick one or two main channels. Choose the ones where your customers are actually looking. People searching for a service need Google. People who might love your offer but are not searching yet may respond to Facebook and Instagram.
- Keep a small slice for testing. Perhaps 10% to 20% for trying something new, so you keep learning without risking the whole budget.
For example, a business with a £1,000 monthly budget might put around £700 into its main channel, £200 into a second, and £100 into testing. Your split will depend on your market, and I go into much more detail in which marketing channels bring customers.
If Google Ads is your main channel, our guide on how much a small business should spend on Google Ads goes deeper on that side.
Fees versus ad spend: do not mix them up
This catches a lot of people out. When you pay for ads, there are usually two separate costs:
- Ad spend: the money that goes directly to the platform (Google, Meta and so on) to show your ads. This is paid separately to the platforms.
- Management fees: what you pay someone to set up, run, track and improve the campaigns.
Some businesses budget for one and forget the other. A budget of £500 a month for "Google Ads" could mean £500 of ad spend with no help, or £500 including a management fee, leaving almost nothing for the ads. Always ask which one is meant.
For reference, my management fees start from £150 a month for Google Business Profile, £400 a month for SEO (search engine optimisation, which helps your website show up in unpaid Google results), £450 a month for Google Ads and £550 a month for Facebook and Instagram Ads. You can see everything on the pricing page.
The cost of doing nothing
Spending nothing can feel like the safe choice, but it has a cost too. If nobody can find you, you depend entirely on word of mouth and repeat custom, which can dry up without warning. A busy month followed by a quiet one, with no way to fill the gap, is a very stressful position.
Not marketing also means:
- Competitors who do show up on Google take the customers searching for what you offer.
- You miss people who would have chosen you if they had simply found you.
- You have no data about what works, so you cannot improve.
This does not mean you should spend wildly. It means a small, tracked budget is usually safer than none at all.
When to spend more
There are good reasons to increase your budget, and it is worth being deliberate about them:
- Your numbers are proven. If you know a pound spent reliably brings back more, scaling up is logical.
- You have spare capacity. Empty appointments, classes or production time are costing you money already.
- You are launching something new. A new service, location or seasonal offer often justifies a temporary boost.
- A competitor is moving in. Holding your ground sometimes needs more investment.
- Your tracking is in place. Without it, more spend is just more guessing.
Increase gradually and keep watching the results. Doubling a budget overnight rarely doubles the return.
Frequently asked questions
What percentage of revenue should a small business spend on marketing?
Rules of thumb vary quite a bit depending on who you ask and what industry you are in, so there is no single correct percentage. Use a percentage as a rough starting point, then check it against your goals and what each customer is worth to you.
How much should a new small business spend on marketing?
New businesses usually need to spend a little more in proportion, because nobody knows them yet. Start with the basics (a clear website and a Google Business Profile), then run a modest, tracked test on one channel and build from there.
Is marketing an expense or an investment?
It can be both. If it is tracked and brings in customers who spend more than the marketing cost, it behaves like an investment. If it is spread thin and never measured, it is much more likely to be a cost with nothing to show for it.
Do I pay the agency or consultant fee on top of ad spend?
Usually, yes. Ad spend goes to platforms like Google and Meta, and a management fee pays for the work of running and improving the campaigns. Always ask for both figures so you can see the total monthly cost.
How long before I know if my marketing budget is working?
It depends on the channel. Paid ads can show early signs within weeks, while SEO usually takes a few months to build. Results vary, so agree a testing period up front and decide in advance what you will measure.
Want help setting a budget that makes sense?
If you are not sure where to start, I am happy to look at your numbers with you. As an independent consultancy, you work directly with me, and if we grow you, we grow together. You can see how I help local businesses on our digital marketing in Tunbridge Wells page.
The easiest first step is a free digital audit, where I look at what you have now and where your money is likely to work hardest. Request your free digital audit or get in touch for a friendly, no-pressure chat.
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