Strategy2 min read
How much should a small business spend on marketing?
How to set a marketing budget from your own goals and margins, split it sensibly, then put more behind what works.
In this article
It is one of the first questions owners ask, and the honest answer is that there is no single right figure. Rules of thumb based on a fixed share of revenue are easy to find, but they ignore what matters most: what you want marketing to achieve and what a new customer is worth to you.
Work from goals and margins
Set a concrete goal, such as a number of new customers a month, and work backwards. Look at your margin on a typical sale: what is left after costs. That tells you how much you can pay to win a customer and still make money. A business with healthy margins and repeat customers can spend more per customer than one selling low-margin, one-off products.
Split always-on work from tests
Think of the budget in two parts. The first is always-on work: content, SEO, keeping your Google Business Profile and social accounts up to date, replying to reviews. It builds slowly and keeps working over time. The second is tests, usually paid ads, where you try an audience, offer or channel for a set period and measure the result. Each test needs a clear limit and an end date.
Include production costs
Ads and posts need something to show. Photography, video, design and copywriting belong inside the marketing budget, not outside it. A common mistake is to fund the ad spend and leave nothing for the material, so careful targeting ends up showing weak visuals. Plan production in batches: one well-organised shoot can supply content for weeks.
Start small, then scale what works
Begin with an amount you are comfortable testing with, set up tracking so every enquiry is counted, and give each test enough time to show a pattern. When something brings customers at a cost your margins can carry, put more behind it. When it does not, stop it and move the money, rather than waiting for it to improve.
Review every quarter
Every three months, set aside time to look at the budget again. Compare the cost per customer by channel, check what the always-on work has built and decide what to keep, cut or grow. Seasons, prices and competitors change, and your budget should change with them.
What to do next
Write down three figures: your goal for the next quarter, your margin on a typical sale and what you spent on marketing last quarter, production included. That is enough to start a budget you can defend. If you would like help turning those figures into a plan, MB Media House is happy to talk it through with you.
