What Percentage of Revenue Should You Spend on Marketing?
The 5 to 12 percent range is a starting point, not a rule. Where you sit within it depends on three things: how established your business already is, how much margin you have to work with, and how competitive your category is. A hairdressing salon in Bristol that already has a full appointment book and mostly repeat clients can run on the lower end of that range, because most of its marketing job is staying visible, not winning strangers over. A new software company in Sheffield trying to get its first hundred customers needs to spend near the top of the range, or above it, because every pound has to work harder to build recognition from nothing. Neither business is doing it wrong. They are simply solving different problems with the same tool.
The mistake most owners make is picking a percentage because it sounds sensible, rather than working out what that percentage needs to achieve. Ten percent of a struggling business's revenue spent on marketing that has no clear job is worse than five percent spent with a plan, because the plan is what turns spend into a result rather than an expense. Before you fix a number, it helps to be clear on what a marketing strategy is, since the strategy tells you which few things are worth funding, and the budget should follow that thinking rather than lead it.
Why a Single Percentage Never Fits Every Business
Revenue is only one half of the sum. A business with thin margins cannot spend the same share of revenue as one with fat margins, because that spend has to come out of what is left after costs, not out of the top line. A joinery firm turning over £150,000 a year with 15 percent margin has roughly £22,500 to play with across everything, wages, materials, tools and marketing, so an aggressive marketing percentage can starve the rest of the business. A consultancy turning over the same amount with 60 percent margin has far more room to invest in being found, because the marketing spend is not fighting the same costs for the same pound.
Customer value matters as much. A business where a customer is worth £40 once can only ever justify a small acquisition spend per customer. A business where a customer sticks around for years and refers others can justify spending considerably more to win them, because the return arrives over a longer stretch. This is why two businesses with identical revenue can have wildly different sensible marketing budgets, and why copying a competitor's spend without knowing their margin or their customer value is closer to gambling than to planning.
What Larger Businesses Are Spending Right Now
It helps to know what the real world is doing, even if it is not a perfect template for a small business. Gartner's 2025 CMO Spend Survey found that marketing budgets have flatlined at 7.7 percent of overall company revenue, a figure that has barely moved and sits comfortably inside the general range small businesses are usually pointed towards. Coverage of the same survey confirmed that budgets held at 7.7 percent of company revenue through 2025, which is worth reading with a caveat attached. That survey polls chief marketing officers at large organisations with dedicated teams, agency retainers and established brand recognition already built over years. A five-person business starting from nothing is not in the same position, and matching that percentage without matching the circumstances behind it can mean underinvesting exactly when you most need to build awareness from scratch.
The more useful signal from the same research is the trend rather than the exact figure. A separate analysis of the survey found that marketing budgets stagnated between 2024 and 2025, with little year-on-year movement, which tells you that even well-resourced companies are holding steady rather than retreating. For a small business, that is a useful nudge against the instinct to cut marketing to nothing the moment cash feels tight. Larger companies with far more room to manoeuvre are choosing to keep spending consistent rather than switching it off, because a business that goes quiet loses the recognition it spent years building.
How to Set a Marketing Budget With No Track Record Yet
A brand-new business faces a different question, because it has no history to calculate a sensible percentage from. Here the honest answer flips the usual advice. You should generally spend more than the mature-business range, not less, because you are starting from zero recognition in a market where competitors already have some. A new bakery opening in a market town in Yorkshire is not fighting for this week's sales. It is fighting to exist in anyone's mind at all, and that costs more per customer at the start than it will once people already know the name.
A workable approach for a genuinely new business is to think in cash terms rather than percentage terms for the first year, since revenue is unpredictable or non-existent at the start. Set aside what you can genuinely afford to lose without threatening the business, commit it to a small number of activities rather than a scattering of small ones, and expect the return to be recognition and enquiries rather than an immediate flood of sales. Once revenue becomes steady, usually somewhere in the second year, you can move to a percentage-based budget and start tracking it properly against a marketing plan that turns the number into a weekly and monthly schedule of activity.
Where the Budget Should Go: The Three Jobs Every Pound Has to Do
A marketing budget is doing three separate jobs, and a common mistake is funding only one of them. The first job is attracting people who have never heard of you, through content, advertising or word of mouth that reaches beyond your existing circle. The second job is nurturing and converting the people who have noticed you but have not bought yet, through follow-up, proof and a clear reason to choose you now rather than later. The third job is keeping and growing the customers you already have, since a customer who returns or refers someone else costs far less to serve than one you have to win from scratch.
Most small businesses over-fund the first job and under-fund the other two, because attracting new attention feels like the obvious definition of marketing. A Cardiff homeware shop that spends its whole budget on adverts chasing new visitors, while doing nothing to follow up with people who added something to a basket and left, or to thank a returning customer, is leaving two-thirds of its own budget's potential value on the table. Splitting spend deliberately across all three, even roughly, usually produces a better return than pouring everything into the most visible one.
Spreading Thin vs Concentrating Your Spend
The instinct when a budget feels small is to spread it across everything, a bit of social media, a bit of local advertising, a bit of print, a bit of search, in the hope that something sticks. In practice this is close to the worst way to spend a limited amount of money, because none of the channels gets enough weight behind it to work. A modest budget split six ways barely registers anywhere. The same budget concentrated on two channels that genuinely reach your customers can build real, visible presence in both.
A Manchester plumbing firm with £600 a month to spend on marketing does far better putting most of it behind a strong Google Business Profile and a steady flow of reviews, plus one well-run local advertising channel, than spreading £100 across six platforms it barely has time to manage properly. The lesson holds at any budget size. A small number of well-resourced choices beats a long list of underfed ones, and the discipline to say no to extra channels is as important as the decision to fund the ones you keep.
Splitting Your Budget Between Brand Building and Short-Term Sales
A budget also needs to be split by time horizon, and this is where many small businesses go wrong without realising it. Spending that chases this week's sales, a discount, a promotion, a push before a quiet period, produces a fast, visible result, which makes it feel like the safer choice for a nervous owner. Spending that simply keeps your name consistently visible to people who are not ready to buy yet produces no immediate result at all, which makes it feel wasteful in the moment. Both are necessary, and the second is the one owners cut first when money feels tight, which is exactly the wrong instinct.
Growth for most businesses comes from steadily bringing in customers who did not previously buy from you, more than from squeezing extra loyalty out of the customers you already have. That means a portion of every budget, even a modest one, needs to go towards simply being seen and recognised consistently, a regular social post, a steady local presence, a recognisable name and look repeated in the same way every time, rather than only towards offers designed to convert someone this week. A business that only ever markets to people who are ready to buy right now is ignoring the much larger group who are not ready yet but will be eventually, and who will only remember you then if you kept showing up in the meantime.
A Simple Way to Set and Review Your Marketing Budget
Put this all together and the process is manageable. Start with your stage. A new business budgets in cash it can afford to lose and expects the return to be recognition rather than immediate sales. An established business budgets as a percentage of revenue, somewhere between 5 and 12 percent depending on margin and competitiveness, adjusted up if the category is crowded and down if repeat business already carries most of the weight. Translate the annual figure into a monthly one, so it becomes a real number you check against rather than an abstract target.
Split that monthly figure across the three jobs, attracting, converting and keeping customers, rather than funnelling all of it into the most visible activity. Choose two or three channels you can properly resource rather than a longer list you cannot, and hold that choice steady for at least a quarter before judging it. Keep a portion, even a small one, pointed at simple, consistent visibility rather than only at short-term offers. Then review the whole thing every quarter against what it produced, enquiries, bookings, repeat orders, rather than against how busy it made you feel. Written down like this, a budget stops being a guess and becomes part of your actual marketing plan, the schedule that turns the number into weekly action.
