The Million-Dollar Question
“How much should I spend on marketing?” is one of the most common questions small business owners ask. There’s no one-size-fits-all answer, but there are frameworks and benchmarks that can guide your decision.
Industry Benchmarks
The U.S. Small Business Administration recommends spending 7-8% of revenue on marketing for businesses under $5 million. Businesses in growth mode or competitive industries often invest 10-20% or more.
For digital marketing specifically, the average small business spends $2,500 to $12,000 per month depending on their goals, competition, and industry.
What Determines Your Budget
Your Revenue Goals
Working backward from revenue targets is the most strategic approach. If you need $500,000 in new revenue and your average customer is worth $5,000, you need 100 new customers. If your conversion rate is 5%, you need 2,000 leads. Calculate what it costs to generate those leads across your channels.
Your Industry’s Competition
More competitive industries require larger budgets. A personal injury lawyer competes against firms spending six figures monthly on Google Ads. A local yoga studio faces much less digital competition.
Your Growth Stage
New businesses often need to invest more aggressively to build awareness and establish market position. Established businesses can often spend less as a percentage because they benefit from existing reputation and organic traffic.
How to Allocate Your Budget
For most small businesses, a balanced starting allocation might look like: SEO and content marketing (25-30%), paid advertising (30-40%), social media (10-15%), email marketing (5-10%), and website optimization (10-15%).
Adjust based on what works. After three to six months of data, shift budget toward your highest-performing channels.
Starting with a Small Budget
If you’re starting with less than $2,000 per month, focus on one or two channels rather than spreading thin. Google Business Profile optimization and basic SEO are high-impact, low-cost starting points. Add paid advertising once you have a converting website and landing pages.
When to Increase Your Budget
If you’re consistently hitting positive ROI, increase your budget. When campaigns are profitable, spending more simply means making more money. Scale what works rather than constantly experimenting with new channels.
Get a Custom Marketing Budget Plan
Brandastic helps small businesses develop realistic marketing budgets aligned with their growth goals. Get a free marketing consultation.
