How Much Should a Small Business Actually Spend on Marketing?

"How much should we be spending on marketing?"

It's one of the most common questions business owners ask.

And, unfortunately, there's no magic number.

You'll find plenty of articles suggesting businesses should spend a certain percentage of their turnover on marketing.

Some suggest 5%. Others recommend 10% or more.

But the reality is that a small independent retailer, a growing manufacturing company and an established professional services business will all have very different needs.

Their customers are different.

Their objectives are different.

And their budgets should reflect that.

So rather than picking a random percentage and hoping for the best, let's look at how to build a marketing budget that actually makes sense for your business.

First, what are you trying to achieve?

Before deciding how much to spend, you need to know what you're spending it on.

Are you trying to attract new customers?

Increase sales from existing customers?

Launch a new product?

Enter a new market?

Build awareness of your business?

Or perhaps you're simply trying to create a more consistent flow of enquiries.

Your objectives should influence your marketing investment.

For example, a business looking to maintain its existing customer base might focus on email marketing, customer communications and ongoing brand visibility.

A business planning significant growth may need to invest more heavily in advertising, website improvements, content and lead generation.

Neither approach is automatically right or wrong.

It's about matching your investment to your ambitions.

Should you spend a percentage of turnover?

Using a percentage of turnover can be a helpful starting point.

But it shouldn't be treated as a universal rule.

As an illustrative planning exercise, let's look at what a marketing budget of 3%, 5% or 10% of annual turnover could mean.

These aren't recommended spending levels for every business. They're simply examples to illustrate how different percentages translate into actual budgets.

A business with £500,000 in turnover and narrow profit margins might need to be particularly careful with spending.

Another business with the same turnover, higher margins and ambitious growth plans might be comfortable investing considerably more.

The important thing is understanding what your business can afford and what you're expecting the investment to achieve.

What should your marketing budget include?

This is where things can get confusing.

When somebody says they're spending £1,000 per month on marketing, what does that actually cover?

It might include:

• Marketing strategy and consultancy
• Google Ads or paid social advertising
• Social media management
• Website maintenance and development
• Search engine optimisation
• Photography and video production
• Graphic design and printed materials
• Email marketing platforms
• Marketing software and analytics
• Content creation and copywriting

It's important to distinguish between the cost of managing marketing activity and the money spent directly on advertising.

For example, if you're paying somebody £400 per month to manage Google Ads and spending £600 on the adverts themselves, your total monthly investment is £1,000.

The £600 advertising budget is paid to the advertising platform.

The management fee covers the expertise, monitoring and optimisation required to run the campaigns.

Both costs need to be considered when assessing whether the activity is worthwhile.

What can you achieve with £300 per month?

Let's start with a relatively modest budget.

For a small business, £300 per month could support a focused piece of ongoing marketing activity.

That might mean some basic marketing consultancy, a limited amount of social media support or help maintaining and improving a particular channel.

But expectations need to be realistic.

£300 per month is unlikely to cover a comprehensive marketing strategy, professional photography, website development, advertising management and regular content production.

And that's fine.

You don't necessarily need everything at once.

With a smaller budget, the priority should be identifying the activity most likely to make a meaningful difference.

For example, if most of your business comes through recommendations but your website is outdated, investing in website improvements might be more valuable than paying for regular social media posts.

The key is focus.

What about £500 to £1,000 per month?

At this level, businesses may have more flexibility to build consistent marketing activity.

Depending on the scope, a budget in this range could support ongoing consultancy, targeted advertising management, content creation or a combination of carefully selected services.

However, remember that advertising spend, creative production and external software costs may need to be budgeted separately.

A business investing £750 per month should still have clear priorities.

Perhaps the main objective is generating qualified enquiries through Google Ads.

In that case, the budget should be structured around campaign management, advertising spend, conversion tracking and relevant website improvements.

Another business might get more value from regular content, SEO and email marketing.

The right allocation depends on where the opportunities are.

And if you've got £1,500 to £3,000 per month?

A larger budget creates opportunities for a more joined-up approach.

You may be able to combine several channels and develop campaigns that support one another.

For example, a business might invest in:

• Ongoing marketing strategy and management
• Google Ads or paid social campaigns
• Search engine optimisation
• Website conversion improvements
• Email marketing
• Regular creative content

But even with a larger budget, it's important not to spread the investment too thinly.

Five poorly managed channels aren't necessarily better than two performing well.

The objective should always be to build a marketing approach that's sustainable, measurable and appropriate for the business.

How do you decide where to spend the money?

Start with your customers.

How do they discover businesses like yours?

Do they search on Google when they need a service?

Do they rely on recommendations?

Are they active on LinkedIn?

Do they regularly purchase from suppliers they've worked with before?

Understanding customer behaviour helps you prioritise the channels most likely to influence buying decisions.

For example, a local emergency plumbing business might benefit from appearing in relevant Google searches.

A specialist B2B manufacturer might benefit more from a combination of search visibility, technical content, relationship-building and targeted outreach.

A visitor attraction could benefit from social media, photography, email marketing and seasonal advertising.

The channels should follow the customer journey.

Not the other way around.

Don't overlook your existing customers

Businesses often focus their marketing budgets almost entirely on attracting new customers.

But what about the people who've already bought from you?

Could they purchase again?

Might they be interested in another service?

Would they recommend you to somebody else?

Email marketing, customer communications and relationship-building can be valuable parts of a marketing strategy.

For some businesses, improving repeat purchases or customer retention could offer a better return than continually investing in new customer acquisition.

That doesn't mean you should stop attracting new customers.

It means looking at the full picture.

How do you know whether your marketing spend is worthwhile?

This is probably the most important part.

Let's say you're investing £1,000 per month in marketing.

Over three months, that's £3,000.

During that period, your marketing generates 30 qualified enquiries.

Of those, six become customers.

Your cost per acquired customer would be:

£3,000 ÷ 6 = £500

Is that good?

It depends.

If each customer generates £150 in one-off revenue, the numbers probably aren't particularly attractive.

But if each customer generates £5,000 in revenue with a healthy profit margin, the picture could be very different.

You need to understand the value of a customer, the cost of delivering your service and the likely profitability of the work.

Revenue alone doesn't tell you whether a campaign is profitable.

And remember, not every marketing activity produces an immediately measurable sale.

Brand awareness, reputation and customer relationships can also contribute to long-term performance.

The aim is to measure what you reasonably can and understand the wider commercial impact.

What if your marketing budget is really limited?

You don't need a huge budget to start improving your marketing.

But you do need to make sensible choices.

If you're working with limited resources, consider starting with the fundamentals.

Make sure your website clearly explains what you do.

Keep your Google Business Profile accurate and up to date, if your business is eligible for one.

Ask satisfied customers for genuine reviews.

Make it easy for people to contact you.

Use your social media channels to share useful, relevant content.

And keep in touch with existing customers.

These activities still require time and effort, but they don't necessarily demand a large advertising budget.

Once you've established what's working, you can make more informed decisions about where to invest next.

Should you hire somebody or manage marketing yourself?

There's no single answer.

Some business owners genuinely enjoy marketing and have the time to manage it effectively.

Others would rather focus on running their business.

And plenty fall somewhere in the middle.

The challenge is that marketing involves a broad range of skills.

Strategy, advertising, design, website development, analytics, photography and copywriting are all different disciplines.

You don't necessarily need to employ a full-time marketing team to access those skills.

Working with an external consultant or agency can provide specialist support without the commitment of building an in-house department.

But the arrangement needs to suit your business.

You should understand what you're paying for, what work is being delivered and how success will be assessed.

Start with the opportunity, not the budget

At 7 Degrees Media, we don't believe every business needs the same marketing package.

A growing manufacturer has different requirements from an independent retailer.

A visitor attraction preparing for its busiest season has different priorities from a professional services business trying to generate more qualified enquiries.

That's why we prefer to start with a conversation.

What are you trying to achieve?

What's working already?

Where are the biggest opportunities?

And what level of investment makes sense?

Sometimes the answer is an ongoing marketing partnership.

Sometimes it's a specific project.

And sometimes it's improving what you've already got before spending more money.

The important thing is making sure your marketing has a purpose.

Not sure where your marketing budget should be going?

Let's have a chat about your business, your objectives and how to make your investment work harder.