How Much Should a Small Business Budget for Marketing?

Ask five different marketers how much you should spend on marketing, and you’ll probably get five different answers. Some will throw out a flat number. Others will tell you a percentage of revenue. A few will dodge the question altogether with, “It depends.”

It’s no wonder small business owners feel like they’re flying blind when it comes to setting a marketing budget. The truth is, there are industry benchmarks you can lean on, but the real answer isn’t just about how much you spend. It’s about where you spend it, how consistent you are, and whether that money is building long-term value or just disappearing into short-term tactics.

Industry Benchmarks

The most common rule of thumb you’ll hear is that small businesses should spend 5–10% of gross revenue on marketing.

• If you’re in growth mode, closer to 10% (sometimes even 12%).

• If you’re more established with steady cash flow, closer to 5%.

That means:

• A business making $500,000 per year might allocate $25,000–$50,000 to marketing.

• A $2 million business might spend $100,000–$200,000.

Sounds straightforward, right? But here’s where it gets complicated: not all marketing spend is created equal.

The Cost of Underspending

Underspending on marketing is like whispering in a crowded room. Your message may be good, but hardly anyone will hear it.

Too many small businesses dip a toe into marketing, a $200 ad campaign here, a part-time freelancer there, and then get frustrated when nothing changes. The problem isn’t that marketing doesn’t work. The problem is that there wasn’t enough momentum for it to work in the first place.

Think about it this way: if your competitors are spending 7% of revenue and you’re spending 1%, you’re not just behind, you’re invisible.

The Risk of Overspending

On the flip side, throwing money at marketing without a plan can be just as damaging. It’s easy to get dazzled by agencies promising big returns, only to find you’re paying for flashy reports instead of real results.

Overspending tends to show up in two ways:

1. Putting too much into a single channel (like ads) while ignoring the foundation (like your website or brand).

2. Paying premium retainers for services you don’t need or can’t measure.

In both cases, the spend looks big on paper but doesn’t build anything sustainable.

Where the Marketing Budget Actually Goes

So, what does a marketing budget cover? For most small businesses, it breaks down into a few categories:

• Website development - Your digital storefront. Often a one-time investment with ongoing hosting and maintenance.

• Content creation - Photos, videos, blogs, and social media posts that tell your story.

• Paid ads - Google, Facebook, Instagram, LinkedIn. The fuel to get your message in front of the right people.

• SEO & analytics - Ensuring people can find you and measuring what works.

• Branding & design - Logos, visuals, and messaging that tie everything together.

Here’s the key: the healthiest marketing budgets spread expenditure across these categories instead of putting all their eggs in one basket.

The Lifespan Factor

One of the most overlooked aspects of marketing spend is lifespan. Not all marketing dollars age the same way.

• Ads stop the second you stop paying.

• Content (like a video or blog) can keep working for years.

• Websites can last five or more years if built right.

• SEO builds compounding value over time.

This is why “cheap” marketing often turns out expensive. If you spend only on ads without building content or a strong website, you’ll be stuck in a cycle of paying endlessly with nothing to show for it when the campaign ends. A smarter spend balances short-term visibility with long-term assets.

A Real-World Example

Let’s say you’re a local service business making $1 million per year. Following the 7% guideline, you’d set aside around $70,000 for marketing. How might that break down?

• Website: Initial build cost up to $5,000, plus ongoing hosting and maintenance (around $150/month, or roughly $1,800 annually). Call it $7,000 total per year.

• Ads & Management: $30,000–$35,000 to drive visibility, capture leads, and optimize campaigns. This is where the bulk of many small business marketing budgets go — and for good reason, since ads deliver immediate reach.

• Content: Around $15,000 on video, photography, and blogs to build trust and improve conversion rates.

• SEO & Analytics: $1,000–$3,000 to keep the site discoverable and measure performance accurately.

  
  

Rounded out, that keeps you close to the $70,000 benchmark, while reflecting the way most businesses lean heavier on ads to fuel consistent lead flow.

Compare that with what many businesses actually do:

• $500/month on ads.

• $0 on content.

• $0 on website updates.

• A vague idea of “word of mouth” as their growth strategy.

The difference is night and day. One approach builds long-term growth with balance. The other bets on chance.

Why Access Matters More Than Price

It’s tempting to obsess over whether you’re paying the “right” number for ads or websites, but here’s what matters more: do you have access to your own accounts and data?

Too many companies set up ads, websites, or analytics in a way where they retain ownership, not you. That means if you ever stop working with them, you lose your entire history: the data, the performance benchmarks, even the accounts themselves.

Smart marketing spend isn’t just about sticking to industry averages. It’s about making sure that if you’re paying for marketing, you have visibility into whether it’s performing. Ownership and transparency should always be non-negotiable.

Final Thoughts

So, how much should a small business spend on marketing?

The benchmarks say 5–10% of revenue, but the truth goes deeper. Spending too little leaves you invisible. Spending too much without strategy wastes money. Ownership of your website, your content, and your data, isn’t determined by how much you spend, but by the agreements you set up front.

The smartest marketing budgets are the ones that:

• Balance short-term visibility with long-term assets.

• Allocate across website, content, ads, and SEO.

• Set ownership and accountability from day one.

  
  

Because at the end of the day, marketing isn’t just an expense. It’s an investment in growth. And like any investment, the returns depend less on the number you spend and more on how wisely you spend it.