How Much Should a Small Business Spend on Marketing?

Ask what a business should spend on marketing and you will be told 7 to 8 percent of revenue. That number is real and it comes from surveys of companies with revenues in the hundreds of millions. If you run a business turning over a few million a year, you are benchmarking yourself against organisations with brand recognition you do not have, cost structures you do not share, and a marketing department larger than your entire company. Here is what the data actually says, why the percentage approach is the wrong starting point, and how to set a number you can defend to yourself.

What the Benchmarks Actually Say

Two surveys dominate this question and they disagree, which is worth knowing before you quote either.

• Gartner's CMO Spend Survey put marketing budgets at 7.8 percent of company revenue in 2026, up slightly from 7.7 percent in 2025 and well down from 9.5 percent in 2022 and 9.1 percent in 2023.
• The CMO Survey, run by Duke University's Fuqua School of Business with Deloitte and the American Marketing Association, put the 2026 figure at around 9 percent. Within that, B2B product companies averaged 7.0 percent and B2B services companies 10.1 percent.

The gap is not an error. They survey different populations. Gartner's sample skews heavily toward companies above a billion dollars in revenue. The CMO Survey is US-only with a different panel. Both are credible measurements of different things, which is exactly why averaging them into one number, as most articles do, produces a figure that describes nobody.

The more useful finding sits underneath both: there is a consistent negative correlation between company size and marketing spend as a percentage of revenue. Bigger companies spend a smaller share. Which means the headline benchmark is the floor for a small business, not the target.

Where You Sit Depends on Three Things

How established you are

• Established, strong referral flow, not chasing rapid growth: 2 to 5 percent can be sustainable. This is a maintenance budget and it works until the referral pipeline thins.
• Established but wanting real growth: 7 to 10 percent. You are buying new demand rather than servicing existing demand.
• New, or entering a new market where nobody knows you: 12 to 20 percent. Awareness has to be bought before anything compounds, and this phase is genuinely expensive.

What you sell and to whom

B2C product businesses spend substantially more than B2B product businesses, roughly two and a half times more by some measures. Consumer packaged goods sit near the top of every industry table, energy near the bottom. Services outspend products. A specialist B2B supplier with forty possible customers in the country should be spending very differently from a consumer brand competing for attention.

Whether you can measure anything

This one is underrated. If you cannot tell which enquiries came from where, you should spend less, because you are buying without feedback. Fixing measurement is usually cheaper than the budget increase you are considering, and it makes every subsequent dirham work harder. Conversion tracking, a way to log where enquiries came from, and someone actually looking at it monthly.

A Better Method Than Percentages

Percentage of revenue is a sanity check at the end, not a way to arrive at a number. Work backwards instead.

1. Start with the revenue you want to add next year. Not total revenue. The new business you need marketing to generate.
2. Divide by your average deal value. That gives you the number of new customers required.
3. Divide by your close rate. If you close one in four qualified enquiries and need 40 customers, you need 160 qualified enquiries.
4. Multiply by your cost per qualified enquiry. If you do not know this number, that is the first thing to find out, and even a rough figure from last year's spend divided by last year's enquiries is better than nothing.
5. Compare the result against your revenue as a percentage. If it lands at 6 percent you have a plausible plan. If it lands at 45 percent, either the growth target or the channel mix is wrong, and it is better to discover that on a spreadsheet than in December.

This takes an hour and produces a number you can explain. It also surfaces the real problem in most marketing plans, which is not the budget but the close rate or the deal value, neither of which more spending fixes.

The Most Expensive Budget Is One That Is Too Small

This is the pattern we see most often and it is worth stating plainly. A business allocates a modest monthly figure, then divides it across SEO, Google Ads, social media, a bit of design and an events budget. Each channel receives an amount too small to produce anything. Twelve months later the conclusion is that marketing does not work for this business.

Every channel has a threshold below which it produces nothing at all rather than producing a little. Ad spend below a certain level does not generate enough data to optimise. SEO below a certain level cannot produce enough content or fix enough of the site to move anything. Splitting a small budget five ways guarantees you sit below every threshold simultaneously.

If your budget is genuinely constrained, pick one channel and fund it properly. One channel working beats five channels almost working, and it teaches you something you can build on.

What to Do With the Number Once You Have It

Two principles, both boring and both reliable.

First, split between things that pay now and things that pay later. Paid advertising produces enquiries this month and stops the day you stop paying. SEO, content and brand produce nothing for months and then keep producing after you stop spending. A business that only does the first never builds anything. A business that only does the second runs out of runway. Roughly half and half is a reasonable starting point, weighted toward paid if you need cash flow now and toward compounding if you are stable and building.

Second, fix the conversion side before increasing the acquisition side. If your website turns 1 percent of visitors into enquiries, doubling traffic doubles enquiries and doubles cost. Getting to 2 percent doubles enquiries for free. The second is almost always cheaper and almost always gets done second, if at all.

One Note on Cutting

When things get tight, marketing is usually the first line cut, because it is the easiest to cut without anything visibly breaking that week. Research published by Harvard Business Review found that companies which maintained or increased marketing spend through downturns grew significantly faster afterwards than those that cut.

That is not an argument for never cutting. It is an argument for cutting deliberately: reduce the channels you cannot measure, keep the ones you can, and protect the compounding work if you possibly can, because that is the one where stopping costs you the accumulated position rather than just the month's output.

The number that matters is not the industry average. It is the smallest amount that lets one channel actually work, sustained long enough to find out whether it does. Most businesses would be better off spending their current budget on one thing for a year than spreading a larger one across five things for a quarter each.