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How Much Should a Small Business Spend on Marketing?

By Paul · · 4 min read

It is one of the most common questions small business owners ask, and the honest answer is: it depends. You will see rules of thumb quoted online, usually as a percentage of turnover, but they vary widely and what suits one business may be wrong for another. Rather than give you a number to copy, this article explains how to arrive at a figure that makes sense for you.

Why there is no one-size answer

Your sensible spend depends on things like:

  • How old your business is. A new business that nobody knows usually needs to put more effort into being found than an established one with plenty of repeat custom.
  • Your goals. Keeping things steady costs less than trying to grow quickly.
  • Your margins. If each sale brings in a healthy profit, you have more room to invest in finding customers.
  • How you win work now. If most of your business comes from word of mouth, you might spend less, but it is risky to rely on one source only.
  • How much time you can give. Time and money can often be swapped. Doing it yourself costs less cash but more hours.

Start with what you can afford

Before thinking about ideal numbers, look at your finances. How much can you spend each month without putting the business under strain? Marketing should be treated as an investment, but it is still money you might not get back quickly, or at all. Set a figure you can comfortably live with.

Work out what a customer is worth

A helpful exercise is to estimate what a typical new customer brings in. Consider:

  1. The average amount they spend with you.
  2. How often they come back.
  3. Your profit on that work, not just the takings.

If a customer is worth a few hundred pounds in profit over time, you can see why spending some money to find one may be reasonable. If the profit per customer is small, you will need to be more careful. These are your own estimates, so be cautious and honest with yourself.

Split your budget sensibly

Rather than putting everything in one place, think in broad categories:

  • The basics: a clear website, a tidy online profile, accurate contact details and a way for people to book or enquire. Without these, other spending is wasted.
  • Regular visibility: posting on social media, a newsletter, or local activity such as flyers or community sponsorship.
  • Content: photos and video that show your work. This is often where a small amount goes a long way.
  • Paid promotion: adverts, if you choose to try them. Start small and test.
  • Tools and help: software, a freelancer or a service that saves you time.

Test small, then do more of what works

You do not have to commit to a big budget in one go. Try something modest for a few months, track the outcome, and adjust. Simple tracking works: ask every new customer how they found you and write it down. You do not need elaborate software to learn a lot.

If something is clearly bringing in enquiries, you might give it more. If something is not doing anything after a fair trial, stop or change it.

Watch out for these traps

  • Spending nothing at all. Waiting for customers to find you rarely works for long.
  • Spending without tracking. If you cannot tell what worked, you are guessing.
  • Chasing every new idea. Pick a few things and do them properly.
  • Paying for big promises. Be wary of anyone guaranteeing results. Nobody can.
  • Forgetting your own time. If you spend ten hours a week on marketing, that has a cost too.

Low-cost ways to market

If cash is tight, there is still plenty you can do cheaply: ask happy customers for reviews, keep your online profiles up to date, share useful posts, join local groups, and make short videos with your phone. Monthly services can also work out cheaper than hiring someone for each task, so compare your options carefully.

FAQ

Is there a standard percentage of turnover I should spend? You will find various suggested percentages, but they differ by sector and stage. Treat them as a rough starting point at best, and base your decision on your own finances and goals.

Should I spend more when business is slow? Possibly, but only if you can afford it. Look at what is likely to bring in enquiries quickly and keep your spending within your limits.

How do I know if my marketing is working? Keep a simple record of enquiries and where they came from. Over a few months, patterns usually show up.

Can I do it all myself? Many owners do, particularly at the start. The trade-off is your time, so decide which jobs are worth handing over.

A gentle next step

If you are weighing up where to put your budget, a free look can help. Register at reelfox.co.uk for 1 free video and a free marketing report. If you decide to continue, plans are Starter £49, Growth £99 and Pro £149 a month, with no VAT, and you can cancel online.

Paul