Most small businesses should plan to spend somewhere between 7% and 10% of gross revenue on marketing. If you’re established and just maintaining, the lower end works. If you’re actively trying to grow or you’re in a competitive market, budget toward the higher end — sometimes more. Doing $500,000 a year in revenue? That’s roughly $35,000 to $50,000 annually, or about $3,000 to $4,000 a month.
Now, before you either panic or get excited, let me add the honesty that number needs.
The percentage is a starting point, not a law
That 7–10% is a rule of thumb, not gospel. I’ve seen businesses do great on less and businesses waste a fortune on more. The percentage tells you the ballpark. It doesn’t tell you whether you’re spending it well.
A few things move the number:
New vs. established. A new business trying to build awareness from zero usually has to spend more, percentage-wise, than an established one that already has a name and a customer base.
Growth vs. maintenance. If you’re happy where you are, you spend to maintain. If you’re trying to grow — new location, new service, bigger market — you spend to grow. Those are different budgets.
Your industry. Competitive, high-margin industries push spending up because everyone’s fighting for the same clicks. A niche local trade might need far less.
Don’t budget by percentage — budget by goal
Here’s the mistake I see constantly. Owners pick a number, spend it, and hope. That’s backwards.
Start with the goal. How many new customers do you want, and what’s a customer worth to you? If a new client is worth $2,000 to your business over their lifetime, and it takes $200 in marketing to land one, that’s a fantastic trade — and honestly, you should spend MORE, not less. If it’s costing you $2,500 to land that same $2,000 client, no budget percentage in the world makes that okay.
This is why I harp on knowing your numbers. The businesses that win aren’t the ones who spend the most. They’re the ones who know what a customer costs to get and what a customer is worth.
Bigger budgets don’t equal better results
I’ll say something the industry hates: a big budget can actually make your marketing worse. When there’s a mountain of money, people get lazy and sloppy. They stop being clever. They just buy more ads and hope volume covers for a weak message.
Some of the best marketing I’ve ever seen came from businesses with almost no budget who were forced to be scrappy, funny, and human. Constraints make you sharp. So don’t assume that spending more automatically fixes things. Spending SMARTER usually does.
Where the money should go
For most small businesses, the budget stack looks something like this: a solid, fast, findable website as the foundation; ongoing SEO so you get found without paying per click forever; some paid ads to drive traffic while the SEO matures; and content that answers your customers’ real questions.
The exact mix depends on your business. A local service company leans hard on local SEO and Google Ads. An e-commerce shop leans differently. There’s no one-size answer, and anyone who gives you one without asking about your business is guessing.
The bottom line
Start with 7–10% of revenue as your ballpark. Then throw out the percentage and ask the real question: what’s a customer worth, what does it cost to get one, and where’s that money working hardest? Spend where the math works. Cut where it doesn’t.
If you want help figuring out the right number for YOUR business — not a generic percentage — that’s exactly the kind of thing we sort out in a consulting conversation. Reach out to me and my team.