How Much Should a Small Business Actually Spend on Marketing?

"How much should I be spending on marketing?" is one of the most-searched small business marketing questions there is — and most answers give you a percentage without telling you which number to apply it to, which makes the percentage almost useless on its own. Here's how to actually work this out for a small, local business.

The commonly-cited rule, and its real catch

The most repeated guideline is roughly 7–8% of revenue for an established small business, rising toward 12–20% for a business still actively trying to grow market share. The catch: this needs to be applied to gross revenue, not profit — and a lot of business owners quietly do the maths on profit instead, which produces a marketing budget that's far too conservative to actually move the needle.

A worked, honest example

A local business turning over £150,000 a year, aiming for steady (not aggressive) growth, lands around 7-8% — roughly £10,500–£12,000 a year, or £875–£1,000 a month. That figure covers everything: paid ads, any tools or subscriptions, design costs, and your own time if you value it properly rather than treating it as free.

Where that budget should actually go, roughly

• Foundational basics first — your Google Business Profile, your website, your review response habit. These cost time more than money, and nothing else works well until they're right.
• Then, paid visibility — Google or Meta ads, local directory placements — once the foundation is solid enough that paid traffic actually converts once it lands.
• Then, ongoing content or campaigns — the "keep showing up" spend, once the first two are genuinely working.

Spending on paid ads before the foundation is fixed is one of the most common ways small businesses waste a marketing budget — you end up paying to send people to a Google listing or website that was quietly losing them anyway.

What if there genuinely isn't a marketing budget yet?

This is common, and it's fine — it just changes the order of operations. Start with the free, foundational fixes (an accurate Google Business Profile, a habit of replying to reviews, basic website fixes) before any paid spend exists at all. A tight or nonexistent budget is actually the strongest argument for figuring out priorities first, since every pound has to count.

The percentage-of-revenue rule is a reasonable starting point, not a precise formula — but the real value isn't the number itself, it's spending that number on the right things, in the right order, rather than on whatever gets pitched to you first. If you're weighing whether to spend that budget on an agency, DIY, or an audit first, that decision genuinely comes before the spreadsheet.