There is no sensible universal percentage of turnover that every small business should spend on marketing.

A good marketing budget should come from:

What growth you are trying to create.

What a new customer is economically worth.

What it currently costs to acquire one.

How much sales and delivery capacity you actually have.

Which marketing channels have proved they can work.

How much cash the business can responsibly invest before seeing the return.

That is considerably more useful than:

“Marketing should be 5% of revenue.”

Five per cent of what business?

A £5 million contractor growing through relationships and tenders?

A £1 million e-commerce company?

A SaaS business with recurring revenue?

A specialist consultant?

A restaurant?

A manufacturer with £100,000 average orders?

The economics are completely different.

So if you searched for the correct percentage, I am going to disappoint you slightly.

There isn't one.

But there is a much better way to work out what your business should spend.

Why percentage-of-revenue rules are so seductive

They are easy.

Turnover:

£2 million.

Marketing percentage:

5%.

Budget:

£100,000.

Done.

It feels scientific.

It isn't.

Even large-company benchmarks vary and need enormous context.

Gartner's 2026 CMO Spend Survey reported average marketing budgets of 7.8% of company revenue. That number is regularly the sort of statistic people repeat as though it provides a budgeting rule. But the survey covered 401 senior marketing leaders across North America, the UK and Europe, and the vast majority worked for organisations generating more than $1 billion in annual revenue. It is emphatically not a benchmark for the average owner-managed small business.

That does not make the research useless.

It makes blind comparison useless.

A £3 million engineering company should not decide its marketing budget because Coca-Cola's CMO spends a particular percentage of revenue.

Use percentages as a sense-check, not the calculation

Once you have built your marketing budget properly, calculate:

Marketing investment as a percentage of revenue.

Marketing investment as a percentage of gross profit.

Marketing investment relative to growth.

Those numbers can be useful.

You can compare:

This year with last year.

Your different business units.

Your budget with whatever credible external benchmarks exist.

But the percentage should usually be the output of the thinking.

Not the input.

Start with the outcome

What exactly are you trying to achieve?

Perhaps:

Maintain existing revenue.

Grow revenue by £500,000.

Enter a new market.

Launch a service.

Replace customer churn.

Increase recurring revenue.

Win larger customers.

Generate more qualified pipeline.

Grow a geographic territory.

Marketing exists to support a business objective.

Business.gov.uk's current digital-marketing guidance takes exactly that approach: start with clear business objectives, understand the audience, decide whether the immediate priority is sales or longer-term brand building, then set a budget and targets based on the return you are trying to create.

So instead of asking:

“How much should we spend on marketing?”

start with:

“What does marketing need to help the business achieve?”

That changes the conversation immediately.

Maintenance marketing and growth marketing are not the same thing

Suppose your business currently produces:

£3 million revenue.

You are happy at roughly £3 million.

Customers repeat.

Referrals are strong.

Churn is low.

Marketing's job may largely be:

Maintain visibility.

Protect existing demand.

Keep pipeline healthy.

Support customer retention.

You may need a relatively modest investment.

Now take exactly the same £3 million business.

Leadership wants:

£5 million in two years.

Different job.

Marketing may need to:

Reach new audiences.

Build new channels.

Improve the website.

Create content.

Run campaigns.

Test paid acquisition.

Support Sales.

Build brand awareness.

Maybe recruit marketing capability.

Why would both businesses spend the same percentage merely because current turnover is identical?

The required change is different.

Work backwards from the amount of new business you need

This is where the budget becomes commercially useful.

Imagine you want:

£600,000 of additional annual revenue.

Your average new customer generates:

£20,000 of first-year revenue.

Roughly speaking, you need:

30 additional customers.

Now ask:

What is the gross profit or contribution from each?

Suppose the average customer generates:

£20,000 revenue.

40% gross margin.

That gives you:

£8,000 gross profit per new customer before wider overhead and acquisition cost.

You now have something against which a customer-acquisition budget can be judged.

Customer acquisition cost matters more than a random revenue percentage

Your customer acquisition cost, or CAC, is roughly:

Total cost of acquiring new customers ÷ number of new customers acquired.

The important phrase is:

Total cost.

Not only Google Ads.

If during a period you spend:

£20,000 paid advertising.

£15,000 agency.

£10,000 content and creative.

£5,000 marketing software.

£20,000 attributable internal marketing resource.

Total:

£70,000.

And marketing produces 50 genuinely new customers.

Approximate CAC:

£1,400.

Now we can have an intelligent conversation.

Is paying £1,400 to acquire a customer attractive?

Depends what the customer is worth.

Compare acquisition cost with contribution, not merely revenue

Suppose a customer spends:

£10,000.

Sounds great.

But gross margin is:

20%.

You generated:

£2,000 gross profit.

Paying £1,400 to acquire them leaves very little before the rest of the company's costs.

Now imagine another service where the customer spends:

£10,000.

Gross margin:

70%.

£7,000 gross profit.

The same £1,400 acquisition cost is completely different economically.

Article #77 looked at customer profitability in depth.

Marketing should increasingly understand which customers create good economics, not simply which customers are easiest to generate.

Lifetime value can justify higher acquisition costs

Perhaps customers normally remain for:

Five years.

Your first-year economics may look ordinary.

But over time they generate considerable contribution.

That can justify spending more to acquire them.

For example:

Annual contribution after direct servicing cost:

£4,000.

Typical relationship:

Four years.

Very simplified expected contribution:

£16,000.

Perhaps spending £2,000 to acquire that relationship is attractive.

But be careful.

Do not create imaginary lifetime value.

If customer retention is poor or you have very little historical evidence, do not justify an enormous marketing budget using:

“They'll probably stay for ten years.”

Use credible data.

Payback period matters

Two acquisition strategies both have excellent lifetime economics.

Channel A pays back its acquisition cost in:

Three months.

Channel B:

Twenty-four months.

If you have enormous cash reserves, perhaps both are viable.

If cash is tight, Channel B can become difficult to fund.

This is why marketing budgeting belongs alongside:

Cash flow.

Not outside it.

Article #85 on the 13-week cash forecast becomes relevant here.

An economically attractive marketing plan can still create a cash problem if expenditure happens months before customers pay.

Work out how much you can afford to invest before the return arrives

Suppose you intend to spend:

£12,000 per month.

The average sales cycle is:

Three months.

Customers then pay:

30 days after invoice.

You may be funding several months of activity before meaningful cash arrives.

How much?

What happens if results take twice as long?

British Business Bank recommends linking investment decisions to business objectives, cash forecasts and expected return rather than evaluating large spending decisions in isolation.

Your marketing budget therefore needs two tests:

Does the economics make sense?

And:

Can the business fund the journey?

Do not define “marketing budget” vaguely

This causes terrible comparisons.

One owner says:

“We only spend £20,000 on marketing.”

They mean:

Google Ads.

Another says:

“We spend £150,000.”

They include:

Marketing Manager salary.

Agency.

Website.

Advertising.

Software.

Events.

Content.

Both might actually have similar levels of external campaign spend.

Decide what you are measuring.

I would normally separate two numbers

Marketing operating cost

The relatively fixed capability required to run marketing.

For example:

Marketing employees.

Retainers.

Core software.

Website support.

Recurring creative resources.

Marketing campaign and growth investment

The more variable money actually deployed into activity such as:

Paid media.

Events.

Sponsorship.

Campaigns.

Content projects.

SEO work.

Direct mail.

Research.

Photography.

Video.

New landing pages.

Keeping them separate helps.

If revenue falls and you ask:

“Can we reduce marketing?”

you can see whether you are discussing:

Cutting advertising.

Or:

Removing the capability required to run the function at all.

Those are very different decisions.

Include the hidden internal cost

Perhaps the owner writes all the articles.

Sales Director spends Fridays creating LinkedIn content.

Administrator manually emails campaigns.

Apparently:

Marketing spend = £0.

No.

There is an internal resource cost.

You may decide not to assign an exact hourly rate.

Fine.

But do not pretend employee and owner time is free.

That becomes particularly important when comparing:

Do it internally.

versus:

Pay somebody else.

Website spend counts when the website is part of customer acquisition

Businesses sometimes separate:

Marketing budget.

Website budget.

Why?

If the website exists primarily to:

Generate enquiries.

Build trust.

Convert visitors.

Support customers.

then at least some of that investment is clearly part of your wider marketing infrastructure.

The same applies to:

SEO.

Photography.

Case studies.

Email marketing.

Marketing automation.

Business.gov.uk specifically says a digital-marketing budget should consider content expenditure alongside paid advertising rather than viewing media cost as the whole marketing investment.

Do not confuse advertising with marketing

This distinction is critical.

Marketing might include:

Market research.

Positioning.

Messaging.

Website.

Content.

SEO.

Email.

Events.

Referral systems.

Public relations.

Customer retention.

Case studies.

Social media.

Direct mail.

Paid search.

Paid social.

Advertising is one component.

So a business saying:

“We tried marketing and it didn't work”

because it spent £1,000 on Facebook ads is being slightly ambitious with the conclusion.

Some businesses need very little paid advertising

Imagine a specialist B2B consultancy.

Average contract:

£150,000.

Target market:

300 companies.

You probably do not need to reach four million consumers.

Your marketing budget may be better spent on:

High-quality research.

Authority content.

Sector events.

Target-account outreach.

Case studies.

Website credibility.

Relationships.

The correct channel depends on the buying process.

British Business Bank's current communications guidance recommends concentrating limited resources on a small number of channels where target customers genuinely spend their time rather than scattering activity everywhere.

This is particularly important for SMEs.

You rarely have enough money to be mediocre everywhere.

Some businesses need substantial paid media

Now imagine:

Consumer product.

Large addressable audience.

Low individual transaction value.

Online purchase.

Marketing can operate completely differently.

Paid search.

Social.

Video.

Retail media.

Creators.

Affiliate.

Potentially significant ongoing investment.

UK digital advertising continues to be an enormous and growing market. IAB UK's latest figures show digital ad spend reached £21.2 billion in the first half of 2026, up 13% year on year, with search alone accounting for £9.1 billion.

That does not mean your business should increase advertising because everybody else is.

It means you are operating in markets where substantial amounts of money compete for attention.

Channel economics matter.

Your previous marketing performance is the best starting benchmark

Before setting next year's budget, look at last year's.

How much did you actually spend?

Where?

What happened?

Article #74 covered marketing measurement in much more depth.

At minimum, understand:

Leads generated.

Qualified opportunities.

Customers won.

Revenue.

Gross profit or contribution.

Acquisition cost.

Where possible:

Retention and repeat purchasing.

Then ask:

Which investment would I happily make again?

Which would I increase?

Which would I stop?

Which do we genuinely not understand?

That is a much better budgeting process than:

“Add 5% because we want growth.”

Do not demand perfect attribution

You will not always know exactly what caused a sale.

Customer:

Saw your LinkedIn posts.

Then Googled you.

Read three articles.

Heard your podcast.

Met you at an event.

Received a referral.

Finally completed a website form.

Google Analytics says:

Organic search.

Was SEO responsible?

Partly.

So was everything before it.

Do not use imperfect attribution as an excuse to measure nothing.

But also do not allocate every pound only to the final click because it happens to be easiest to track.

Business.gov.uk explicitly distinguishes marketing intended to build longer-term brand trust from one-off activity aimed at immediate sales, recognising that the two have different time horizons and should not be evaluated identically.

Brand marketing still needs a commercial reason

“It's brand awareness.”

is not immunity from scrutiny.

What audience are you trying to become known by?

Why?

What evidence suggests awareness is increasing?

Branded search?

Direct traffic?

Target-account recognition?

Survey data?

Referrals?

Sales conversations?

Share of relevant audience?

You may not calculate a precise £3.72 return for every pound.

That does not mean:

Spend anything and call it brand.

Performance marketing is not automatically superior

Because you can see:

Clicks.

Leads.

Conversions.

CAC.

does not make the channel strategically better.

Performance activity can harvest existing demand exceptionally well.

But somebody also needs to create:

Awareness.

Preference.

Trust.

Demand.

This is particularly important where customers take time to decide or where your market is crowded with similar suppliers.

Your budget needs to reflect both:

Capturing demand that exists.

And:

Helping create future demand.

The balance depends on your market.

Beware marketing budgets built entirely around lead volume

You generate:

300 leads.

Amazing.

Sales says:

270 are rubbish.

Useful?

Maybe not.

Article #60 covered the difference between marketing activity and genuine lead generation.

Budget against:

Qualified commercial outcomes.

Not simply response.

That might mean:

Cost per qualified opportunity.

Cost per sales meeting.

Cost per customer.

Cost per £1 of gross profit acquired.

Those become increasingly useful as the business matures.

Sales capacity places a ceiling on useful marketing spend

Suppose Marketing can create:

100 qualified leads per month.

Sales can properly handle:

1. 
   

Should you double Marketing's budget?

Probably not yet.

Fix Sales capacity.

Likewise:

Sales can win the customers.

Operations cannot deliver them.

Article #76 applies.

The purpose of marketing is not generating demand the business cannot economically convert or serve.

Growth needs an operating system behind it.

Marketing should reflect your current constraint

If Sales needs more opportunity:

Marketing may deserve more investment.

If plenty of leads exist but conversion is terrible:

Fix Sales.

If conversion is good but customers are unprofitable:

Fix offer, pricing or targeting.

If work is plentiful but delivery is broken:

Do not blindly increase demand.

This is why I resist percentage rules so strongly.

A company with insufficient demand and one drowning in work should not automatically spend the same percentage of turnover on customer acquisition.

Marketing budget should respond to evidence

Imagine you invest:

£5,000 per month.

It reliably produces:

£20,000 of attributable gross profit from new customers.

Capacity exists.

Payback is acceptable.

What should you do?

Potentially:

Spend more.

Test whether the economics hold at:

£7,500.

Then perhaps:

£10,000.

A budget ceiling should not prevent sensible expansion of something demonstrably working.

The inverse is also true.

You spend:

£10,000 monthly.

Cannot connect it to:

Qualified opportunity.

Revenue.

Retention.

Strategic brand value.

Do not keep spending merely because:

“It's in the budget.”

Budgets are boundaries.

Not commandments.

Returns usually deteriorate eventually

This matters when scaling channels.

Perhaps the first:

£2,000 of Google Ads

captures highly valuable, high-intent searches.

The next:

£5,000

requires broader keywords.

The next:

£20,000

reaches weaker intent.

Your acquisition cost rises.

This is normal.

Do not assume:

£5k spend creates £25k profit.

Therefore:

£50k creates £250k.

Marketing rarely scales perfectly linearly.

Increase gradually and watch marginal performance.

Judge the next pound, not only the average

Suppose average CAC is:

£800.

Excellent.

But the additional budget added during the last quarter produced customers at:

£2,200 CAC.

That tells you the channel may be reaching saturation.

Average historic performance can hide declining marginal returns.

Ask:

What happened when we increased spend?

That is the number relevant to the next increase.

New marketing channels need test budgets

You do not know enough yet to assign a giant annual budget.

Suppose you want to test:

LinkedIn ads.

Trade event.

Direct mail.

You need enough money to conduct a fair experiment.

But not so much that being wrong hurts badly.

Business.gov.uk's current guidance on digital strategy encourages focused testing and analytics before wider investment, particularly where a business is entering a new audience or market.

Define before the test:

Audience.

Offer.

Budget.

Duration.

What success looks like.

What would justify continuing.

What would cause you to stop.

Then learn.

A £200 test can be just as useless as a £200,000 gamble

This depends on the channel.

Business spends:

£200.

Gets no leads.

Declares:

“Google Ads doesn't work for us.”

Maybe.

Or perhaps £200 produced 14 clicks in a competitive market and told you almost nothing.

Testing needs enough volume to generate usable information.

On the other hand:

“We need to give it a proper chance”

can become a wonderful excuse to burn £40,000.

Define the test.

Define the stopping rule.

Give marketing enough time for the channel to work

Paid search can produce signal quickly.

SEO may take considerably longer.

Content builds cumulatively.

Events have long lead times.

Brand investment can influence buying over months or years.

Do not assess every activity on the same timetable.

Likewise, do not hide weak activity behind:

“Marketing takes time.”

Know roughly what evidence you should expect first.

Maybe:

Search impressions.

Traffic.

Response.

Qualified leads.

Pipeline.

Revenue.

Different stages appear at different times.

Do not cut marketing automatically when revenue slows

This is one of the easiest mistakes.

Revenue falls.

Owner cuts:

Marketing.

Because:

“We need to save money.”

Perhaps correct.

But what happens to future pipeline?

Article #79 dealt with exactly this lag.

If marketing is clearly ineffective, cut or change it.

But removing productive demand generation because current revenue is weak can deepen the next decline.

Understand:

What is working.

What is not.

Then decide.

Equally, do not treat marketing as sacred

Some marketers will tell you:

“Never cut marketing in a downturn.”

Why not?

What if your marketing is crap?

Commercial decisions need more nuance.

Protect activities creating valuable demand.

Stop waste.

Reallocate.

Test.

Do not preserve expenditure because Marketing has elevated itself above financial scrutiny.

Build a base budget and an opportunity budget

This can work extremely well.

Base marketing investment

The things you intend to keep doing because they support the business consistently.

For example:

Website.

Core SEO.

Email.

Marketing capability.

Reliable advertising.

Content.

Opportunity or test budget

Money available for:

New campaigns.

Emerging channels.

Events.

Experiments.

New markets.

If something works exceptionally well, money can move towards it.

This avoids the ridiculous situation where a highly profitable new opportunity appears in June but cannot be funded because:

“We've already allocated the annual marketing budget.”

Do not lock every pound twelve months ahead

Strategy needs discipline.

Marketing needs some flexibility.

Gartner's 2026 research on large marketing organisations describes exactly this pressure towards sharper prioritisation and reallocation under constrained budgets, rather than assuming the original annual allocation should remain untouched regardless of performance. Again, its sample is predominantly very large organisations, but the budgeting principle is highly transferable.

Set boundaries.

Then allow evidence to move money.

Allocate budget by customer economics, not marketer enthusiasm

Marketing wants to promote:

Service A.

Why?

Great creative opportunity.

Sales says:

Service B converts better.

Finance says:

Service C produces twice the margin.

Operations says:

Service C is already at capacity.

Excellent.

Now you have a management conversation.

Perhaps marketing should push:

Service B.

Or perhaps the company should fix capacity for C first.

Marketing budget allocation belongs inside business strategy.

Not inside Marketing alone.

Consider the customer's path to purchase

Where do customers actually come from?

For some businesses:

Google.

For others:

Tender portals.

Trade associations.

Referrals.

LinkedIn.

Architects.

Dealers.

Distributors.

Physical location.

Repeat business.

Why spend on TikTok because everybody talks about TikTok if your actual buyer selects suppliers through an approved procurement framework?

Know your customer.

Business.gov.uk's guidance on both branding and digital strategy repeatedly starts with understanding who the customer is, where they are and how they engage before choosing channels or committing budget.

Channel follows customer.

Not fashion.

Existing customers deserve budget too

Marketing is not only acquisition.

Suppose:

Acquiring a customer costs £1,500.

Keeping a good customer engaged costs far less.

Perhaps marketing investment belongs in:

Email.

Customer education.

Account content.

Events.

Loyalty.

Cross-selling.

Case studies.

Useful communications.

Do not pour everything into the front door while existing customers quietly leave through the back.

Referrals are not free marketing

They can be extraordinarily cost-effective.

But strong referral systems may require:

Excellent delivery.

Relationships.

Customer communication.

Case studies.

Networking.

Partnership development.

Time.

Perhaps none appears under:

Advertising spend.

That does not make it free.

Understand the wider system generating referrals.

Then invest appropriately.

SEO is not free either

Another favourite.

“Organic traffic is free.”

No.

Good SEO may require:

Research.

Content.

Technical work.

Website development.

Digital PR.

Expertise.

Time.

The click may not have a media charge.

The capability producing the click does.

Count it properly when comparing channels.

Social media is not free because posting costs £0

If someone spends:

Ten hours a week

creating content:

That is:

520 hours a year.

There is a cost.

Perhaps the return is fantastic.

Fine.

Measure it.

Do not compare:

£0 social media

with:

£30,000 paid advertising

when one contains six months of employee time that has conveniently disappeared from the calculation.

A practical budget calculation

Imagine an established service business.

Current revenue:

£2.5 million.

Growth target:

£3 million.

Additional required revenue:

£500,000.

Average new customer first-year revenue:

£25,000.

Required additional customers:

Approximately:

20.

Average first-year contribution after direct delivery cost:

£10,000.

Management decides that, given retention, cash, capacity and risk, it is initially comfortable testing an acquisition cost of up to:

£2,000 per customer.

Twenty customers at £2,000:

£40,000 acquisition budget.

But marketing also requires:

Website and SEO:

£15,000.

Content and creative:

£10,000.

Marketing technology:

£5,000.

Now indicative total investment:

£70,000.

That is:

2.8% of current revenue.

Is 2.8% the magic number?

No.

We arrived there because of the objective and economics.

If the business needed much faster growth, the answer might be completely different.

Then test the funnel

Twenty additional customers.

What does that require upstream?

Suppose:

25% of qualified sales opportunities become customers.

You need:

80 qualified opportunities.

Suppose:

40% of marketing-qualified leads become genuine sales opportunities.

You need:

200 suitable leads.

Now ask:

Can the proposed £40,000 acquisition spend realistically produce those 200 leads?

Historical data should tell you.

If it cannot, either:

Budget increases.

Target decreases.

Conversion improves.

Offer changes.

Channel changes.

Or several at once.

Now the marketing budget connects to reality.

Improvement in conversion can be more valuable than more budget

Suppose your current website converts:

1% of relevant visitors.

You could buy twice as much traffic.

Or improve conversion.

Likewise Sales could convert:

10%.

Maybe improving qualification, follow-up and sales execution changes the economics dramatically.

Marketing budgeting should not assume the only lever is:

More money.

Sometimes the most profitable marketing investment is improving what already happens after attention arrives.

Measure cost per profitable customer, not merely lead

This is where Article #77 becomes especially useful.

Imagine:

Channel A generates customers at:

£700 CAC.

Channel B:

£1,300.

Easy.

Channel A wins.

Except Channel A's customers:

Purchase small projects.

Need extensive support.

Churn quickly.

Channel B's customers:

Buy larger work.

Pay properly.

Stay.

Generate referrals.

Which channel deserves more budget?

Customer economics must eventually flow back into marketing allocation.

Ask whether Marketing can explain where the next £10,000 should go

This is an excellent test.

Not:

“What is your budget?”

Ask:

“If I gave you another £10,000 tomorrow, where would you put it, why, and what do you reasonably expect to happen?”

A strong answer might be:

“£6,000 into the paid search campaign currently generating qualified opportunities at £420 each, because we have additional search impression opportunity. £4,000 into new landing pages because conversion is currently the limiting factor.”

Weak answer:

“Probably more social.”

Marketing should understand its own marginal opportunities.

Ask the reverse question too

“If I had to remove £10,000, where would it come from with the least commercial damage?”

That reveals:

Weak channels.

Legacy activity.

Vanity projects.

Things nobody has challenged because:

“We've always done it.”

Budgeting is allocation.

That means both adding and removing.

A small business should probably not market everywhere

The UK digital advertising market alone now contains enormous investment across search, social, video, retail media and countless other formats.

You cannot outspend everybody.

You do not need to.

Pick the channels matching:

Your customer.

Buying journey.

Offer.

Resources.

Strengths.

Then become good enough at them to learn something meaningful.

Three well-run channels usually beat eleven neglected profiles and six half-funded campaigns.

Your marketing budget should have an owner

Who decides?

Owner?

Marketing Director?

Sales and Marketing Director?

Leadership team?

Fine.

But one person needs accountability for:

Budget.

Allocation.

Measurement.

Recommendation.

That does not mean Finance stays out.

Marketing should understand commercial numbers.

Finance should understand that not every marketing effect appears instantly.

The business needs both perspectives.

Review the budget monthly, not only annually

Ask:

What did we spend?

Where?

What evidence appeared?

What changed?

Which channels are improving?

Which are deteriorating?

How much qualified pipeline was created?

What should we reallocate?

Article #74 provides the deeper measurement framework.

This should become normal management.

Not an annual argument when somebody asks Marketing to justify £120,000 retrospectively.

Use a rolling forecast

Marketing is dynamic.

Perhaps:

£100,000 annual budget.

You do not need to commit the entire £100,000 on 1 January.

Forecast by month or quarter.

Update based on:

Performance.

Seasonality.

Cash.

Capacity.

New opportunities.

Business.gov.uk recommends connecting sales and marketing strategies to wider business planning and financial forecasts, rather than treating promotional expenditure as a disconnected activity.

Marketing should live inside the commercial plan.

When should you increase marketing spend?

I become more comfortable increasing the budget when:

You have profitable capacity available.

The growth objective genuinely requires more demand.

Existing acquisition channels have credible economics.

Sales can handle more opportunities.

Delivery can serve more customers.

Cash can support the acquisition cycle.

Measurement is good enough to know what is happening.

The target customer is clearly defined.

In that situation:

More marketing can be fuel.

When should you be cautious?

I slow down when:

Nobody knows which marketing activity creates useful customers.

Sales already has more leads than it can handle.

Customer profitability is unclear.

Margins are weak.

Cash is extremely tight.

Website conversion is terrible.

Existing campaigns have never been properly measured.

The company wants marketing to compensate for a weak offer.

Operations cannot handle additional demand.

The only justification is:

“We need more awareness.”

Fix the obvious leak before pouring more money through it.

Do not expect Marketing to fix a sales problem

Lots of leads.

Few sales.

Owner says:

“Marketing isn't working.”

Maybe.

But perhaps Sales is not converting.

Article #59 on falling sales and Article #60 on insufficient marketing leads help separate those problems.

Measure where the funnel breaks.

Do not keep increasing marketing spend because the bottom of the funnel is broken.

Do not expect Marketing to fix a proposition nobody wants

The offer is:

Poorly positioned.

Too expensive for the value.

Undifferentiated.

Unclear.

Wrong audience.

Marketing can make more people aware of the problem.

That is not necessarily useful.

Sometimes marketing's most valuable work is:

Customer research.

Positioning.

Offer design.

Messaging.

Not promotion.

Do not confuse a marketing agency's recommendation with a business budget

Agency says:

“We recommend £5,000 monthly ad spend.”

Why?

What happens at:

£3,000?

£5,000?

£10,000?

How does that connect to:

Search volume?

Audience size?

Historic conversion?

Target CAC?

Sales capacity?

A good agency should be able to explain.

If the recommendation is simply the amount they usually manage for companies your size, keep asking.

An agency fee and media budget are different

Suppose:

Agency:

£2,500 monthly.

Media:

£3,000.

Total external monthly cash:

£5,500.

Do not tell yourself you spend:

£3,000 on marketing.

You spend £5,500 on that activity.

Likewise include:

Creative.

Landing pages.

Software.

when they are materially part of producing the outcome.

Full economics prevent self-deception.

Marketing needs a return threshold

This does not need to be identical across everything.

Paid acquisition might require:

Clear commercial payback.

Brand investment might have a longer horizon.

SEO may build a compounding asset.

Experimentation may have a high failure rate.

But leadership should know:

What would make this investment worthwhile?

Do not approve money without knowing what success looks like.

British Business Bank's decision-making guidance recommends calculating expected ROI before major investments and aligning expenditure with defined growth, productivity or risk objectives.

Marketing is an investment.

Treat it accordingly.

A practical 90-day marketing-budget reset

If your current budget basically exists because:

“That's what we spent last year”

I would reset it.

First, define the growth requirement

What revenue, pipeline, customer or retention outcome needs supporting over the next 12 months?

Second, understand customer economics

Average revenue.

Gross profit or contribution.

Retention.

Payment behaviour.

Capacity consumed.

What is a genuinely valuable customer worth?

Third, audit the last twelve months of marketing

For each significant activity:

What did it cost?

What did it produce?

What can reasonably be connected to it?

What did we learn?

Fourth, identify the bottleneck

Do you need:

More demand?

Better conversion?

Better targeting?

More sales capacity?

Better delivery capacity?

Do not automatically choose more traffic.

Fifth, protect proven activity

Where the economics are good and capacity exists, fund it.

Sixth, remove obvious waste

Subscriptions nobody uses.

Channels nobody measures.

Events attended through habit.

Activity producing the wrong customers.

Seventh, establish a test budget

Choose one or two new opportunities worth learning about.

Define success and stopping points.

Eighth, connect the budget to cash flow

When does money leave?

When does commercial return realistically arrive?

Ninth, review monthly

Reallocate based on evidence.

Not emotion.

Now you have a marketing investment system rather than a fixed annual guess.

If you desperately want a percentage, calculate your own

After all of that:

Total marketing investment:

£120,000.

Annual revenue:

£3 million.

Marketing investment:

4% of revenue.

Useful.

Next year you might spend:

£180,000

because:

A proven channel scales.

Or:

£90,000

because:

You reach capacity and shift focus towards margin.

The percentage changes because the business changes.

That is exactly how it should work.

The right marketing budget can be surprisingly small

If:

Customer demand is strong.

Referrals are reliable.

High-value target market is narrow.

Retention excellent.

Growth ambitions modest.

Then perhaps you need less than conventional wisdom suggests.

Do not increase spending because someone tells you:

“Serious businesses invest 10% in marketing.”

Serious businesses invest according to economics.

The right budget can also be considerably larger than you expect

Perhaps:

You have strong margins.

High customer lifetime value.

Huge capacity.

Proven acquisition channels.

Ambitious growth target.

Why artificially restrict marketing to 3% of revenue?

If every additional £1,000 reliably creates substantially more contribution and the system can handle the customers, the rational budget may be much higher.

That is the other reason percentage caps are dangerous.

They can cause underinvestment too.

The answer is not “spend as little as possible”

Marketing is not a necessary evil.

The objective is not:

Cheapest leads.

Lowest budget.

It is:

Best commercial return from finite resources.

Sometimes spending £100,000 badly is wasteful.

Sometimes spending only £10,000 when a proven opportunity exists is equally poor management.

The number means nothing without the economics.

So how much should your small business spend on marketing?

Enough to support the growth or retention objective you have deliberately chosen.

Enough to properly fund the channels capable of reaching the customers you actually want.

Enough to test new opportunities fairly.

But not more than:

Your customer economics justify.

Your cash can fund.

Your Sales team can convert.

Your Operations team can deliver.

And your evidence suggests is worth deploying.

Start with the outcome.

Work backwards through:

Customer value.

Conversion.

Required opportunities.

Acquisition cost.

Channel capacity.

Cash.

Then build the budget.

Afterwards, by all means divide it by revenue and admire the percentage.

Just don't mistake the percentage for the thinking that created it.