A common starting point for a small business marketing budget is 7 to 8 percent of revenue. That guideline comes from the U.S. Small Business Administration, which applies it to businesses with less than $5 million in revenue and margins of 10 to 12 percent (SBA, 2021). Treat it as a starting line, then adjust for your goals, your stage and what your results show.
The percentage-of-revenue rule of thumb
The SBA’s guidance comes with two useful caveats (SBA, 2021):
- Budgets vary widely, from 2 percent of sales to as much as 20 percent while a business gears up a new product or service.
- The 7 to 8 percent figure assumes margins of 10 to 12 percent after all your other expenses, including marketing. Thinner margins may call for a smaller share, and bigger growth goals may call for more.
In plain terms, 7 to 8 percent means setting aside 7 to 8 cents of every dollar of revenue. The SBA also says no single number fits every business: newer businesses need to spend more to build awareness, and established businesses with a steady customer base can reduce their budgets (SBA, 2019).
A percentage keeps marketing in proportion to the business and grows with you. Its weakness is that it looks backward. If you’re trying to grow fast, last year’s revenue may be too small a base, so pair it with a goal-based check.
What larger companies spend
Big-company surveys give useful context, though they aren’t a target for a small business.
- Gartner’s 2026 survey of 401 marketing leaders, most at companies with more than $1 billion in annual revenue, found marketing budgets averaging 7.8 percent of company revenue, up slightly from 7.7 percent in 2025 (Gartner, 2026).
- The CMO Survey’s 2026 report found marketing spending averaged about 9 percent of company revenue, with a median of 5 percent (The CMO Survey, 2026). A median that far below the average means a smaller group of heavy spenders pulls the average up.
- In the same survey’s breakout by company size, the groups with less than $100 million in revenue reported higher average shares than the larger companies, though those groups were small (The CMO Survey, 2026).
Four ways to set your small business marketing budget
- Percentage of revenue. Start with the SBA’s range and adjust for your margins.
- Work back from your goal. Decide how many new customers you need, estimate what it costs to win one (your past marketing spend divided by the new customers it brought in), and multiply the two. Then check the result against the percentage. If you don’t have past numbers yet, run a small test first and use its results as your estimate.
- Adjust for your stage. Plan more for a launch, a new location or a new service, and less when referrals keep your calendar full.
- Set a test budget. Give any new channel a fixed amount, a fixed period and one clear measure of success before you commit more.
A simple way to build your first budget
- Start with last year’s revenue, or a realistic forecast if you’re new.
- Choose a percentage, using the SBA’s range as a guide, and turn it into a monthly number.
- Subtract fixed costs first, such as website hosting and care, software and any retainers.
- Split what’s left across the one or two channels most likely to reach your customers.
- Hold back a small reserve to test something new.
- Review results monthly and rebalance each quarter.
When to spend more, and when to hold back
- Spend more when you launch, open a location, add a service or want to fill a slow season, and when tracking shows a channel returns more than it costs.
- Hold back when you can’t take on more customers, when your website or follow-up can’t convert the interest you already get, or when you can’t track results yet. Fix those first, then scale.
Where the money goes
The SBA suggests splitting a marketing budget into two parts: brand development, such as your website, blog and sales materials, and promotion, such as campaigns, advertising and events (SBA, 2021). Inside those two buckets, give each cost its own line:
- People: agency or freelancer fees, or staff time
- Media: ad spend paid to Google, Meta or other platforms
- Production: photography, video, design and printing
- Tools: scheduling, email, analytics and design software
Keep fees and ad spend separate so you can see what each one does. If you’re pricing out social media or ads, our guides to social media management costs and Google Ads vs. Meta ads explain what drives those numbers.
Track it like an investment
The SBA recommends comparing your marketing and sales costs with the revenue they generate, so you know you’re getting a positive return. It also notes that some tactics, like print advertising and word of mouth, are hard to measure (SBA, accessed 2026). A few habits make tracking easier:
- Ask each new customer how they heard about you, and record the answer.
- Use conversion tracking on your website and ad accounts.
- Give each campaign its own link, phone number or offer code where you can.
- Review spend and results once a month, channel by channel.
- Note seasonal swings, so a slow month isn’t mistaken for a failing channel.
Red flags in a marketing plan
- The whole budget sits in one channel, with no test and no backup.
- You have no way to trace results back to spend.
- Fees and ad spend arrive as one number you can’t break apart.
- The contract runs long with no scheduled performance reviews.
- Someone promises a specific number of leads or sales.
How AO can help
We help you set a marketing budget that fits your goals, then plan where each dollar goes across social media, advertising, branding and print. Browse our services, or contact us for a plan built around your business.
Sources
- Create Your Marketing Plan (SBA Ascent, Strategic Marketing), U.S. Small Business Administration, 2021
- How to Get the Most From Your Marketing Budget, U.S. Small Business Administration, 2019
- Marketing and sales, U.S. Small Business Administration, accessed 2026
- Gartner 2026 CMO Spend Survey press release, Gartner, 2026
- The CMO Survey Topline Report 2026, The CMO Survey, 2026
- The CMO Survey Firm and Industry Breakout Report 2026, The CMO Survey, 2026
Quick answers
What percentage of revenue should a small business spend on marketing?
SBA guidance suggests 7 to 8 percent of revenue for small businesses with less than $5 million in revenue and margins of 10 to 12 percent. Budgets can range from 2 percent of sales to as much as 20 percent while you gear up a new product or service.
Does a marketing budget include my website and social media?
It should. The SBA suggests splitting your budget between brand development, such as your website and sales materials, and promotion, such as campaigns, advertising and events. Track agency fees and ad spend as separate lines so you can see both.
How do I know if my marketing budget is working?
Compare what you spend with the revenue it brings in, as the SBA recommends, and track results by channel. Keep what returns more than it costs, and fix or cut what doesn't.