It's the question every owner asks, and the honest answer is "it depends" — but that's not helpful on its own. So here's the actual framework we use to set a marketing budget that drives growth without lighting money on fire.
The percentage-of-revenue starting point
A common rule of thumb is that small businesses invest somewhere around 7–8% of gross revenue back into marketing. That's a reasonable baseline for a steady, established business. But the right number depends a lot on which mode you're in:
- Growth mode — new business, or actively trying to expand? You'll likely lean higher, often 10–20% of revenue, because you're buying market share you don't have yet.
- Maintenance mode — established, with steady referrals and repeat customers? You can often hold a healthy position closer to 5%.
If you're brand new with little or no revenue, flip the math: set a fixed monthly amount you can sustain for at least six months, because marketing compounds and rarely pays off in week one.
The smarter method: work backward from a goal
Percentages are a starting point, not a strategy. The better approach is goal-based budgeting:
- Decide how many new customers you want this quarter.
- Estimate what an average customer is worth to you.
- Figure out roughly what it costs to acquire one (your cost per lead times how many leads it takes to close a sale).
- Multiply out — that's your working budget.
When you know a customer is worth far more than what it costs to land one, spending more becomes an easy, confident decision instead of a nervous guess.
Where to spend it first
Order matters. Before paid ads, lock in the foundation that makes every other dollar work harder: a fast, clear website, an optimized Google Business Profile, and basic local SEO. Then layer in paid campaigns on Google and social once the foundation is converting. Spending on ads while your website and profile are weak is like pouring water into a leaky bucket.
The goal isn't to spend the most — it's to spend where each dollar returns more than it costs, then do more of that.
Always measure
Whatever you spend, track what it produces. Know your cost per lead and cost per customer by channel, and shift budget toward what's working. The owners who win aren't the ones with the biggest budgets — they're the ones who measure honestly and double down on what pays.
Not sure where your money is best spent right now? That's exactly what we help with. Take a look at our services, or book a free discovery call and we'll build you a plan around your actual goals.