How Much Should a Small Business Spend on Marketing?

Most small businesses should plan to spend somewhere between 5% and 12% of their revenue on marketing. Businesses that sell to other businesses usually land at the lower end of that range. Businesses that sell to consumers, and newer businesses still building awareness, usually land at the higher end.

That range is a starting point, not a rule. Below I'll show where the numbers come from, how to choose your own number, and how to split it so the money actually brings in customers. It's a good exercise for this time of year, while you're planning 2027.

What the benchmarks say

There's no official number every business should hit. The U.S. Small Business Administration says as much on its blog, and then points to industry benchmarks. Those benchmarks put average marketing spend at about 7.9% of revenue, with a big difference by business type:

Those figures come from 2018 data, so treat them as a rough guide. Bigger companies still land in the same place, though. Gartner's 2026 CMO Spend Survey found marketing budgets at 7.8% of company revenue. Most of the companies in that survey bring in more than $1 billion a year, so that's a large company number, but it tells you the 7% to 8% range has held steady for years.

How to figure out your small business marketing budget

Here's a simple way to get to a number you can actually defend.

1. Start with revenue. Use last year's revenue if your business is steady, or next year's projected revenue if you're growing fast or just getting started.
2. Pick a percentage. Start around 5% to 7% if you sell to other businesses or most of your work comes from referrals. Start around 8% to 12% if you sell to consumers, compete with a lot of local businesses, or are trying to grow quickly.
3. Do the math. A business doing $500,000 a year that picks 7% has a marketing budget of $35,000, or about $2,900 a month. At $1 million and 7%, it's $70,000, or about $5,800 a month.
4. Check it against your goals. If you need 10 new customers a month and each one is worth $3,000, ask whether your budget can realistically bring them in. If not, either the budget or the goal needs to move.

When to spend more (or less) than average

Spend more if:

• You're new and people don't know you yet
• You're opening a new location or launching a new service
• Your competitors are visible everywhere and you're not
• Your margins are healthy and each customer is worth a lot over time

You can spend less if:

• Most of your business comes from referrals and repeat customers
• You're already at capacity and can't take on more work
• Your marketing is already working and you're mostly maintaining it

One warning: cutting marketing to zero when things get tight usually backfires. The leads you lose show up as a slow month two or three months later.

How should a small business split its marketing budget?

Once you have a number, think about where it goes in three buckets.

Foundation. Your website, your Google Business Profile, and your branding. If these are weak, every dollar you spend on ads or social works harder than it should. Fix the foundation first.

Ongoing visibility. Social media, SEO, blog content, and email. These build up over time, so they reward consistency more than big bursts.

Paid growth. Google, Meta, and LinkedIn ads. Ads bring results fast, but they stop the day you stop paying. Only add them once your foundation is solid and you can track what each ad brings in.

A newer business might put more toward the foundation in year one. An established business with a good website might put more toward visibility and ads. You can see how we handle each of these on our services page.

What your budget should cover besides ads

Owners often think "marketing budget" means "ad spend." It's bigger than that. Plan for:

• People: your time, a freelancer, an agency, or a hire
• Tools: email platform, scheduling tools, design software
• Content: photos, video, writing
• Ad spend: the money that goes straight to Google or Meta
• Print: business cards, flyers, signage

If you're doing it all yourself, count your own hours too. Ten hours a month on social media is time you're not spending on clients. If that sounds familiar, our post on the signs your business has outgrown do it yourself marketing is worth a read.

How to know if your marketing budget is working

The right budget is the one that pays for itself. Track these every month:

• Where new customers come from. Ask every one of them.
• Cost per lead. Total spend divided by the number of inquiries.
• Cost per customer. Total spend divided by the number of new customers.
• Customer value. What the average customer spends with you over time.

If a customer is worth $3,000 and it costs you $300 to get one, your marketing is doing its job and you can probably spend more. If you can't answer these questions, start tracking before you raise your budget.

Frequently asked questions

The bottom line

Pick a percentage that fits your business, do the math, split it across foundation, visibility, and growth, and track what comes back. That beats guessing every time.