Most small businesses spend between 5 and 10 percent of revenue on marketing. Common guidance across the US, UK, and Canada lands around 7 to 8 percent for established businesses, rising to 10 to 20 percent for newer ones still building awareness. The right number depends on your stage, your margins, and whether you can measure what you get back.
Key takeaways
- A common rule of thumb across the US, UK, and Canada is 5 to 10 percent of revenue, around 7 to 8 percent for established businesses.
- Newer businesses building from zero often need 10 to 20 percent to get traction.
- Your margins matter. A business on thin margins can't spend like one on healthy ones.
- Where you spend matters as much as how much. Email returns around 42 for every 1 spent.
- Spending without measuring is the fastest way to waste a marketing budget.
How much do most small businesses spend on marketing?
The common rule of thumb is 5 to 10 percent of gross revenue, and it holds up well across the US, UK, and Canada. Most official guidance, including the US Small Business Administration, points to around 7 to 8 percent for established businesses with healthy margins. So a business turning over half a million a year would typically spend somewhere between 25,000 and 50,000 annually, or roughly 2,000 to 4,000 a month, in whatever your local currency is.
But here's the honest truth: there's no single right number, and anyone who gives you one without asking about your business is guessing. The percentage is a starting point, a gut check, not a rule. What actually matters is your stage, your margins, and whether you can tell what's working.
Why does it depend on my business stage?
Because a brand-new business and an established one are in completely different situations.
If nobody knows you exist yet, you're building from zero. Every unit of spend is going toward getting your name out, proving you can deliver, and earning those first reviews. At this stage, spending 10 to 20 percent of revenue is normal and often necessary. It feels expensive relative to what's coming in, because you're investing in survival and traction.
Once you're established and people know you, the maths changes. Awareness compounds over time, so you can often maintain your position on a smaller percentage. The businesses that built well early get to spend less later, because the brand is doing some of the work for them.
Why do my margins matter?
Because a percentage of revenue means nothing without looking at what you keep. A business running on 5 percent margins simply cannot spend the same share on marketing as one running on 15 percent margins and stay solvent. The usual 7 to 8 percent guideline assumes margins in a healthy range.
So before you copy a benchmark, look at your own numbers. How much do you make on each sale after costs? How much is a customer worth to you over time? A business where each customer is worth thousands over the years can afford to spend far more to win one than a business making a one-off, low-margin sale. Your budget should fit your economics, not a number you read online.
Where should the money actually go?
This is where most budgets are won or lost. Spending money isn't the goal. Spending it where it returns is.
For most small businesses, the highest-value places to start are the ones that compound or pay back reliably: showing up properly on Google, a website that turns visitors into calls, and email, which remains one of the best returns in marketing at around 42 back for every 1 spent. Paid ads have their place for fast results, but they stop the moment you stop paying, so they work best alongside the foundations rather than instead of them.
The mistake to avoid is spreading a small budget thinly across everything. One or two channels done properly will always beat five done half-heartedly.
If you're not sure whether your current spend is working or leaking, our free audit gives you an honest outside read on where your money is going and what it's actually returning. Request an audit.
How do I know if I'm spending too much or too little?
You'll only know if you measure. This is the part most small businesses skip, and it's why so many feel like marketing is a black hole.
The question isn't really "how much should I spend." It's "what is each unit of spend bringing back." If you can track which spending turns into calls, customers, or donations, the budget answers itself: you spend more on what works and stop what doesn't. If you can't track it, you're guessing, and guessing is how businesses end up convinced marketing doesn't work when really they just couldn't see what was working.
Start with a sensible percentage for your stage, put it into one or two things done well, and measure what comes back. Then adjust based on evidence, not anxiety.
Frequently asked questions
What percentage of revenue should go to marketing? A common range is 5 to 10 percent, with most guidance across the US, UK, and Canada pointing to around 7 to 8 percent for established businesses. Newer businesses building awareness often spend 10 to 20 percent.
How much should a brand-new business spend on marketing? Often more than an established one, around 10 to 20 percent of revenue, because you're building awareness from zero and need traction, reviews, and first customers.
Is it better to spend on ads or other marketing? Ads deliver fast results but stop when you stop paying. Foundations like Google visibility, a strong website, and email tend to compound and return more over time. Most businesses need a mix.
How do I know if my marketing budget is working? By measuring what each unit of spend brings back in calls, customers, or donations. If you can't track results, you can't tell whether you're spending too much or too little.
Should a non-profit spend on marketing the same way? The logic is the same: invest to build awareness and bring in supporters, match spend to what you can measure, and focus on the channels that reliably return donors and volunteers.
What's the most cost-effective marketing for a small business? Showing up well on Google, a website that converts, and email consistently deliver strong returns for low cost, which is why they're usually the best place for a small budget to start.
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