How Much Should a Small Business Spend on Marketing?

You have probably seen the number. The SBA says small businesses should spend 7 to 10 percent of gross revenue on marketing. That figure gets repeated in every blog post and business plan template on the internet.

It is also mostly useless.

Not because it is wrong. It is a reasonable average across industries, company sizes, and growth stages. But an average tells you what other people are doing. It does not tell you what you should be doing. A pre-revenue startup and a 20-year-old plumbing company with a full referral pipeline have nothing in common, and yet the same percentage gets handed to both.

The real question is not how much to spend. It is what to spend on, in what order, given where your business actually is right now.

What counts as marketing spend

Before you set a budget, you need to agree on what goes in it. Most small business owners undercount.

Marketing spend includes your website hosting and maintenance, any paid advertising, the tools you use for email and social media, the freelancers or agencies you hire, the time your staff spends on marketing tasks (yes, that counts), your SEO tools and content production, photography, video, design work, trade show fees, sponsorships, and print materials.

It does not include sales commissions, general business software, or your CRM unless the CRM is primarily a marketing automation tool.

When you add it all up honestly, most small businesses are already spending more than they think. The problem is rarely that the total is too low. The problem is that the money is scattered across too many things, with no way to tell what is working.

Why the percentage benchmark fails

The 7 to 10 percent guideline assumes a few things that may not be true for your business.

It assumes you have stable revenue to calculate a percentage of. If your revenue fluctuates by 40 percent quarter to quarter, your marketing budget will too, and that kind of inconsistency makes it impossible to build momentum with any channel.

It assumes your industry has average customer acquisition costs. A local bakery and a B2B software company operate in completely different cost environments. The bakery might acquire a customer for the price of a free sample. The software company might spend thousands.

It assumes you are in a maintenance phase, not a growth phase. If you are trying to grow aggressively, 7 percent is not going to get you there. Companies in active growth mode routinely spend 15 to 20 percent of revenue on marketing. That is not reckless. That is the cost of acceleration.

The percentage is a sanity check, not a strategy. Use it to make sure you are not wildly out of range. Then forget about it and focus on what the money is actually doing.

Where most small businesses waste money

The most common waste is spending on visibility without a system to convert it. You run ads that send people to a website that has no clear next step. You post on social media three times a week to an audience that has no reason to buy from you today. You pay for a booth at a trade show and collect business cards that sit in a drawer.

None of that is marketing. That is activity.

The second most common waste is hiring help before you know what you need. Bringing on a growth consultant or an agency can be the right move, but only if you have done enough groundwork to know what problem you are hiring them to solve. If you cannot articulate what a successful engagement looks like, you are going to spend money on deliverables that do not move the needle.

The third is chasing channels because someone told you to. Your competitor is on TikTok, so now you need to be on TikTok. Your neighbor's business blew up on Google Ads, so you should try Google Ads. That is not a strategy. That is mimicry. Your business has its own economics, its own audience, and its own strengths. Start there.

What to spend on first if the budget is tight

If you have a limited budget, and most small businesses do, there is a clear priority order.

First, get your Google Business Profile right. If you serve a local area, this is the single highest-return marketing asset you can own. It costs nothing but time, and it puts you in front of people who are already looking for what you sell. Fill out every field. Add photos. Respond to reviews. Keep your hours current. That is baseline.

Second, make sure your website can convert a visitor into a lead or a customer. That means a clear value proposition on the homepage, an obvious way to get in touch, and pages that answer the questions your customers actually ask. If your site does not do those three things, nothing you spend on driving traffic to it will matter.

Third, build a content strategy that compounds over time. A single well-written page that ranks for a term your customers search can generate leads for years. Paid ads stop the moment you stop paying. Content does not. That is the difference between renting attention and owning it.

Fourth, once those foundations are in place, consider paid channels. Not before. Running ads to a broken website with no content strategy is the most efficient way to waste money in marketing.

How to set your actual number

Start with what you can afford to lose. That is not cynicism. It is realism. Marketing is an investment with uncertain returns, especially in the first six months of any new initiative. If spending a certain amount would put your business at risk, that amount is too high regardless of what any benchmark says.

Then work backward from a goal. If you need 10 new customers a month and your average customer is worth $2,000 a year, you can afford to spend some meaningful fraction of that lifetime value to acquire each one. The math will vary, but the principle holds. Tie the budget to a specific outcome, not to a percentage of revenue.

Track what happens. Not vanity metrics like impressions and followers. Track leads, conversations, and revenue. If a channel is not producing results after a reasonable period, cut it and redirect the money. Marketing is not a loyalty program. You do not owe any platform your continued spending.

The honest answer

There is no universally correct marketing budget for a small business. There is only the budget that makes sense given your goals, your margins, your competitive environment, and your willingness to be patient while the work compounds.

The businesses that get marketing right are not the ones that spend the most. They are the ones that spend consistently, on the right things, and measure what happens. That is the whole strategy.