How Much Should a Small Business Spend on Marketing?

Someone asks you for a number, and you don't have a good answer

It usually happens in a leadership meeting, not at your desk. Someone — the owner, a co-founder, whoever holds the checkbook — asks what the marketing budget should be for next year, and they want a number, not a philosophy. You go looking for an answer and find a dozen different rules: some sources say a fixed percentage of revenue, some say it depends on your growth stage, some say it depends on your industry, and none of them account for the fact that your business isn't the "average" business any of those rules were built around.

The honest problem is that "small business" covers an enormous range. A ten-person services firm and a hundred-person e-commerce company are both technically small businesses, and they have almost nothing in common when it comes to what marketing needs to accomplish or what it should cost. A rule that fits one will misfit the other badly.

This article won't hand you a single percentage and call it done. It will show you how to use percentage-of-revenue as a starting frame, adjust it for your specific situation, and turn that number into an actual channel-level budget you can hold yourself to — rather than a figure you quoted once in a meeting and then ignored.

Why a borrowed percentage rarely fits

Most answers to "how much should a small business spend on marketing" point to a single percentage of revenue and stop there. The trouble is that the percentage figures circulating in different sources come from very different populations, and applying the wrong one to your business will send you in the wrong direction.

Gartner's CMO Spend Survey, for example, found that marketing budgets averaged 7.7% of overall company revenue in 2025, based on 402 CMOs and marketing leaders surveyed in early 2025. That figure is real, but it describes large enterprise organizations — the CMOs Gartner surveys typically run marketing functions at companies with median revenue well over $1 billion. Applying that same 7.7% to a 10-to-200-employee company and multiplying it out produces a budget number that has no real connection to your situation. The percentage might coincidentally land close to what makes sense for you, but the survey wasn't measuring anything like your business, so treat any resemblance as chance rather than evidence.

The U.S. Small Business Administration's guidance is built for a more relevant population: it suggests that small businesses with under $5 million in annual revenue allocate 7–8% of gross revenue to marketing. That's a meaningfully different starting point than an enterprise CMO survey, and it's the more defensible frame if your company is genuinely small by revenue. Still, confirm the current guidance directly with the SBA before treating any percentage as fixed — these figures get revisited, and your own situation (debt load, margin, growth targets) can justify moving above or below any published range.

The point isn't that one percentage is right and the others are wrong. It's that a percentage only means something once you know whose data produced it and whether that population resembles yours.

Using percentage-of-revenue as a frame, not a verdict

Here's a way to use percentage-of-revenue honestly: as a range-finder, not a final answer.

Start with your trailing twelve months of revenue, or your realistic forecast for the year ahead if revenue is growing or shrinking meaningfully. Apply a range — say the SBA's 7–8% frame, if your revenue and situation resemble the small businesses that guidance describes — and treat the result as a starting range to interrogate, not a number to submit.

Worked example (plug in your own figures): Say your trailing-twelve-month revenue is $2,000,000, entirely as an example input for you to replace with your own number. A 7% allocation puts a marketing budget around $140,000; an 8% allocation puts it around $160,000. That $20,000 spread between the low and high end of the range is exactly where the adjusting work in the next section happens — is your business the kind that should sit at the low end, the high end, or does neither number make sense once you look at what you're actually trying to do?

That range is only useful if you immediately stress-test it against your specific business — which is what most percentage-based advice skips.

Adjusting the frame for your actual situation

A single percentage doesn't know whether you're launching a new product line, defending market share against a well-funded competitor, or running a mature business that mostly needs to keep existing customers renewing. Adjust the frame for what's actually true about your year:

• Growth stage. A business chasing new-market entry or a first major expansion typically needs to spend nearer the top of any reasonable range, because awareness and pipeline don't yet exist to lean on. A stable, referral-heavy business with strong retention can often run leaner and still hold its position.
• Margin and cash position. The percentage-of-revenue frame assumes you can afford the percentage. If margins are thin this year, a lower absolute number that you can actually fund and sustain beats a textbook percentage you have to walk back mid-year when a campaign gets pulled for lack of money.
• Channel mix already in place. A business with a strong owned-audience channel (email list, existing customer base, organic search presence) may need to spend less than one that's starting from zero and must buy every unit of attention.
• What "marketing" includes in your number. Some businesses count salaries, tools, and software inside the marketing budget; others count only working media and program spend. Before you compare your percentage to anyone else's, confirm you're both counting the same things — otherwise you're comparing two different definitions of "marketing spend" as if they were the same measurement.

None of these adjustments come with a precise multiplier you can apply mechanically. They're judgment calls, and they're yours to make — the goal of the percentage frame was never to remove judgment, only to give you a defensible starting point to reason from.

Turning a percentage into an actual budget

A percentage of revenue is a single number. A budget is a set of decisions about where that number goes, and that's where most of the real planning work happens. Once you've settled on a total, the next step is allocating it across channels — paid, content, events, partnerships, whatever mix fits how your customers actually find you — so the total stops being an abstraction and becomes a set of line items you can track and defend individually.

This is also the point where a documented marketing plan for small business earns its keep. A plan ties each budget line to a specific objective and campaign, so when someone asks why a line item is sized the way it is, the answer already exists instead of needing to be reconstructed from memory. If you're building this structure for the first time, an annual marketing budget template gives you the channel rows and month-by-month columns to start from rather than building the spreadsheet from a blank sheet.

One more consideration worth naming directly: Gartner's 2025 survey also found that 59% of CMOs reported insufficient budget to execute their strategy — a reminder, even from a much larger-company sample, that the number on paper and the number needed to actually run the plan are two different things. Build in room for that gap rather than assuming the budget you land on will feel comfortable all year.

There's a related waste problem worth naming honestly: marketers use only about a third (33%) of their martech stack's capability, down from 42% in 2022 and 58% in 2020, according to Gartner's Marketing Technology Survey. Before adding a new line item to the budget for another tool, it's worth confirming the tools you already pay for are being used — that's budget you may already have, sitting unused rather than needing to be found new.

A percentage of revenue tells you where to start looking. It doesn't tell you where to land — that part still requires knowing your own business better than any survey does.

Watching the number against reality all year

The number you land on at the start of the year is a plan, not a guarantee. Revenue moves, a channel underperforms or overperforms, an opportunity shows up mid-quarter that wasn't in the original plan. The businesses that keep their marketing budget honest aren't the ones that pick the perfect percentage upfront — they're the ones that check the plan against what's actually being spent on some regular cadence, rather than discovering the gap at year-end when it's too late to correct course.

That means tracking budget-vs-actual by channel as the year unfolds, not reconciling it once a quarter from memory and a stack of invoices. If a channel is running over, you want to know while there's still budget left to shift, not after it's gone. This is a habit more than a tool — but a habit is a lot easier to keep when the mechanics are built for it rather than bolted onto a general-purpose spreadsheet. Our marketing budget percentage of revenue guide walks through the reasoning behind the percentage frame in more depth, and our marketing plan and budget guide covers how the plan, the budget, and the ongoing check-in fit together as one system rather than three separate documents.

If you'd rather not build the tracking mechanics from scratch, the Marketing Budget Tracker Workbook in our store gives you the channel-level structure and the budget-vs-actual formulas already built, so the first thing you do with your number is put it to work rather than spend another week formatting a spreadsheet.

The number is a starting point, not the whole answer

There is no universal answer to how much a small business should spend on marketing, and any source that gives you one clean figure is asking you to ignore everything specific about your business. What you can do is start from a defensible range built for businesses that actually resemble yours, adjust it honestly for your growth stage and cash position, turn it into a channel-level budget tied to a real plan, and then hold yourself to checking it against actuals regularly enough to catch problems while they're still fixable.

If you want more of this kind of reasoning — plan structure, budget mechanics, and how to run the check-in cadence that keeps a marketing plan from going stale — you can browse the marketing budget tools hub or subscribe below for future guides as we publish them.