How Much Should a Small Business Spend on Marketing
The standard answer is 7% of revenue. For a business turning over £300,000, that's £21,000 a year on marketing.
That might be half your take-home pay.
It might be the difference between making payroll and not.
And most businesses following that rule spend it badly. They fund Google Ads campaigns they don't understand. They pay for a website refresh that looks nice but converts worse than the old one. They sponsor a local event because it feels like the right thing to do.
Then they wonder why nothing changed.
Start with what you need, not what you earn
Most small businesses budget marketing as a percentage of revenue because that's what the textbooks say. The problem is that approach assumes you have predictable margins, consistent customer acquisition costs, and enough headroom to fund experiments.
You don't.
What you have is a finite amount of cash and a need to generate leads this month. Not next quarter. Not once the campaign matures. Now.
So budget backwards from a conversion goal instead.
Pick the one thing that would materially change your business if it happened consistently. For most businesses under £500k revenue, that's one of three things:
- Five new customers a month.
- Ten qualified enquiries a week.
- Fifteen people walking through the door who didn't know you existed yesterday.
Now work out what it costs to make that happen.
If you're a local service business and you need five new customers a month, you probably need twenty solid enquiries to get five conversions. If your Google Business Profile brings in ten of those for free because you've actually maintained it, you need ten more. If a well-targeted Facebook ad campaign costs £300 a month to generate those ten enquiries, that's your number. Not 7% of revenue. £300.
What actually counts as marketing spend
This is where most small businesses lie to themselves.
Your website is marketing spend. The hosting, yes. But also the time you spent tinkering with the homepage copy at 11pm because you weren't happy with how it read. If that took you six hours and your time is worth £40 an hour, that's £240.
Your social media is marketing spend. Not the posting itself necessarily. The three hours a week you spend planning, photographing, replying to comments, and checking if it's working. That's £120 a week if you're valuing your time properly.
The flyers you printed are marketing spend. So is the two hours you spent designing them and the Saturday morning you spent delivering them.
Your brand is marketing spend. The logo you paid someone to design five years ago. The colours you picked. The way you answer the phone. The tone of your invoices. All of it.
Most businesses do not add this up. They look at their Google Ads bill and their quarterly print run and call that their marketing budget. Then they're baffled when someone tells them they're spending £2,000 a month when the spreadsheet says £600.
The difference is your time. And your time costs money whether you pay yourself for it or not.
The survival budget: What it actually takes to stay visible
If you stop marketing entirely, you disappear slower than you think.
Your existing customers don't vanish overnight. Word of mouth keeps ticking over. Your Google Business Profile still shows up if someone searches your exact name.
But new enquiries dry up within six weeks. Competitors start appearing above you. The phone gets quieter. Then much quieter.
The survival budget is the minimum you can spend and still generate new business without relying entirely on referrals and repeat customers. For most local service businesses, that floor is £200-400 a month.
Here's what that buys:
- A functioning website that loads properly and doesn't look like it was built in 2009. That's £10-30/month in hosting and maintenance if you're doing it yourself. More if someone else is.
- A Google Business Profile you actually update. Weekly posts. Photos. Responses to reviews within 24 hours. That's free in cash terms but costs two hours a week of your time.
- Some kind of consistent presence where your customers actually are. For most local businesses that's Facebook, not Instagram, not TikTok, not Twitter. One decent post a week. Maybe a small boost on the post that's working. £50-100/month plus your time.
- Printed materials when you need them. Business cards that don't look like you printed them at home. Flyers that survive being posted through a letterbox. That's £50-150 every few months depending on what you're doing.
That's the floor. Below that you're invisible to anyone who doesn't already know you exist.
The growth budget: What it costs to actually expand
If you're trying to grow, survival-level spending doesn't cut it.
Growth means outspending your current customer acquisition rate. It means running ads even when your pipeline is full because you're trying to build momentum for next month. It means spending money before you know it'll work.
For a business doing £250k in revenue and trying to hit £400k, the growth budget is usually £800-1,500 a month. Not 7% of current revenue. Not 5% of target revenue. A flat number based on what it actually costs to generate the additional customers you need.
Here's what that looks like in practice:
- Your survival budget baseline (£200-400/month). You don't stop doing the things that keep you visible.
- Paid advertising that actually converts. Google Ads for local service businesses. Facebook for retailers. LinkedIn if you're B2B. That's £400-800/month depending on your sector and your competition.
- Content that brings in enquiries. Not blog posts about industry trends. Specific help for the exact problem your customer is searching for right now. If you're doing it yourself that's time. If someone else is doing it that's £300-600/month for something decent.
- Physical materials when they're the right tool. A roller banner for a trade show. Properly finished brochures for a high-value sale. Signage that people can actually read from the road. That's project-specific but averages £200-400/month if you're doing it properly.
The difference between survival and growth isn't scale. It's consistency and speed. You're trying to compress twelve months of slow organic growth into six. That costs money up front.
When to cut and when to spend more
Most businesses cut marketing when money gets tight. That feels rational. You've got payroll to cover. Rent is due. Marketing is the discretionary spend.
It's also usually wrong.
The decision isn't about affordability. It's about pipeline.
If your enquiries are steady and your close rate hasn't dropped, you can ease off. Not stop. Ease off. Move from growth budget to survival budget. Keep the visibility work. Cut the acquisition spend.
If your enquiries are falling, cutting marketing is the worst possible move. You're already losing momentum. Cutting spend accelerates it.
The correct decision is based on two numbers:
- How much cash do you have to survive the next three months with zero new customers?
- How long does it take a new enquiry to turn into cash in the bank?
If you've got six months of runway and your sales cycle is four weeks, you spend more. You can afford to lose £2,000 this month to generate £8,000 next month.
If you've got six weeks of runway and your sales cycle is three months, you don't spend a penny on anything with a long payback. You do the survival work. You chase overdue invoices. You reactivate old leads. You get on the phone.
Marketing is not always the answer. Sometimes the answer is better cash flow management and a more aggressive collections process.
The point where you need to pay someone
Most small businesses doing under £400k revenue do their own marketing badly.
That's not an insult. It's just maths.
You're doing sales, operations, customer service, bookkeeping, and possibly physical delivery of the thing you sell. Marketing is something you do at 9pm on a Wednesday when you've finally cleared your inbox.
It shows.
The question isn't whether you can afford to pay someone. It's whether you can afford not to.
If you're spending more than £1,000 a month on marketing and you genuinely don't know what's working, you need help. That might be an agency. That might be a freelancer. That might be someone in-house if you're big enough.
If you're spending less than £1,000 a month, you probably can't afford to pay someone properly. You're better off learning enough to do it competently yourself. That means one platform. Done well. Not six platforms done badly.
For most businesses the tipping point is around £400k revenue. Below that you're probably doing it yourself. Above that you're wasting money by not delegating it.
The actual return calculation you need to run
Here's the only formula that matters:
If I spend £X per month for Y months, how many customers will that generate, and is the total revenue worth more than the total cost plus the cost of waiting?
Most businesses skip the last bit. They calculate ROI as revenue divided by spend. That ignores time.
If you spend £500 a month for six months and generate three customers worth £2,000 each, that's £6,000 revenue for £3,000 spend. A 2:1 return sounds good.
But you waited six months for that return. If your cash flow can't handle six months of outgoings with no income from that channel, a 2:1 return might as well be a loss.
The better version of that question is: can I afford to spend £3,000 over six months, and if the return is only 2:1, is that enough to justify the risk?
For some businesses, yes. For others, no. The answer depends on your margin, your cash reserves, and what else you could have done with that £3,000.
That's the calculation. Not a percentage of revenue. Not industry benchmarks. Your margin, your cash position, and the minimum return you need to make the spend worth the risk.
The pattern
Most advice on marketing budgets optimises for averages. Industry standards. What similar businesses spend.
The businesses that spend marketing budget well optimise for their specific conversion goal and their actual cash position. They know what it costs to acquire a customer. They know how long they can afford to wait for the return. They adjust spend based on pipeline, not on percentages.
If you're a small business under £500k revenue, start with one number: the thing you need to happen this month to move the business forward. Work out what it costs to make that happen reliably. That's your marketing budget.
Not 7% of turnover. Not what a competitor told you they spend. The cost of the outcome you actually need.
If you need materials to support that, whether it's printed flyers, professional business cards, or branded signage, Printlogik handles the production while you focus on the strategy that actually drives customers through the door.
