How Much Should a Small Business Spend on Marketing?
There's a real, commonly-cited benchmark range for marketing spend. Here's what it is, why it varies, and how to think about it if you're starting from zero.
By Fieldstone Digital
The most commonly cited benchmark, from the U.S. Small Business Administration and repeated across most marketing-budget guides, is 7-8% of gross revenue for established small businesses, with newer businesses or those in growth mode sometimes spending closer to 10-12%. That range is a reasonable starting anchor, but it hides more than it explains on its own.
Why the range is so wide
A business that's been operating for ten years with steady repeat customers needs far less new-customer acquisition spend than one that opened six months ago and has no reputation yet. Industry matters too — a business with a high customer lifetime value (say, a roofing company landing a $15,000 job) can justify spending more per lead than one with a low-margin, low-repeat product.
Rather than starting from a percentage, it's usually more useful to work backward from a target: how many new customers do you need this month, what's a customer worth to you, and what are you willing to spend to acquire one. That number, multiplied by how many you need, is a more grounded budget than an arbitrary percentage.
Where the money actually goes
For most local and small businesses, marketing spend breaks down into a few real categories:
- Foundational assets — your website, Google Business Profile, and basic SEO. This is largely a one-time or low-recurring cost that everything else depends on. Skimping here makes every other dollar spent less effective, since paid traffic sent to a weak site converts poorly.
- Local SEO and reviews — ongoing, lower-cost, compounding. Slower to show results but keeps producing without continuous ad spend.
- Paid advertising — Google Ads, social ads, or similar. Fast, but stops the moment you stop paying. Best used once the foundation (site, profile, reviews) is solid enough to convert the traffic you're paying for.
- Content and reputation — blog content, case studies, review generation. Slow-building, but it's the layer that increasingly matters for AI-powered search and recommendation, not just traditional Google results.
A practical starting order
If you're starting close to zero, the order that tends to produce the best return is: get the website and Google Business Profile right first, build a review-generation habit, then layer in paid advertising once the first two are converting the traffic you already have. Spending on ads before the foundation is solid is the most common way small businesses waste a marketing budget — you end up paying to send people to a site or profile that loses them anyway.
Fixing what's already broken before paying to send more traffic to it is almost always the higher-return move.
If you don't know where you stand
The honest starting point for a budget conversation isn't a percentage of revenue — it's knowing what's actually working and what isn't on your current site and profile. A free instant check or a full report card is a faster way to find that out than guessing at a spend number first.