Ask the owner of a small engineering firm how much she spends on marketing, and she laughs. “Whatever’s left over.” Some months that means a few thousand rand on ads and a local sponsorship. Other months, when a big supplier invoice lands, it means nothing at all.
She isn’t unusual. Many small businesses treat marketing as the last item in the budget, funded from whatever remains after everything else. It feels prudent. But it means marketing rises and falls with cash flow rather than with what the business is trying to achieve, and, as we’ve seen elsewhere in this series, stopping and starting tends to undo much of the value.
So how much should a small business spend? There’s no single right number. But there are useful benchmarks, and a better way to decide than waiting to see what’s left.
One Like insight: A marketing budget should be set by your goals, not by what happens to be left over.
What businesses actually spend
The most widely quoted benchmark comes from Gartner’s annual survey of chief marketing officers. In its 2025 edition, it found that marketing budgets remain flat at 7.7% of overall company revenue, the same as the year before. That figure is an average, though, and half the CMOs surveyed reported budgets of 6% or less. The survey also covers mainly large companies, so it isn’t a direct guide for a small business.
For smaller firms, a guideline often attributed to the US Small Business Administration suggests that businesses with revenue under $5 million allocate around 7–8% of revenue to marketing, assuming healthy margins. Other surveys suggest smaller companies tend to spend a higher share of revenue than larger ones, partly because they have less existing awareness to rely on.
What these averages hide is huge variation. Consumer brands typically spend far more than industrial firms. Businesses in their first couple of years, building awareness from scratch, often need to spend more than established ones. Businesses with thin margins simply can’t spend the same percentage as those with comfortable ones. And many small businesses, according to various surveys, spend very little at all.
So benchmarks are a sense check, not an answer. They tell you whether you’re wildly out of line with others, but not what your business specifically needs.
Setting a budget from your goals
A more useful approach is to work backwards from what you want to achieve. It doesn’t need complicated maths.
1. Start with the goal. How many new customers do you want next year, or how much additional revenue?
2. Work out what a customer is worth. Roughly how much profit does an average customer bring in over the time they stay with you?
3. Estimate what it costs to win one. Look at past marketing and how many customers it brought. Even a rough estimate is better than none.
4. Multiply. If you want 50 new clients and it typically costs around R2,000 in marketing to win one, you need roughly R100,000. If each client is worth far more than R2,000 in profit, the investment makes sense.
5. Sense-check against benchmarks and cash flow. Compare your figure with typical percentages for your type of business, and make sure you can sustain it.
Then split the budget sensibly. As we explored in Why Promotions Alone Won’t Build a Brand Worth Owning, part should build long-term memory and reputation and part should drive sales now. And as What Happens When You Stop Showing Up showed, protecting a minimum level of activity matters more than occasional big bursts.
[Infographic placement] Building a marketing budget backwards. A simple flow: Goal (50 new clients) → Cost to win one (about R2,000) → Budget needed (about R100,000) → Value of a client (more than R2,000 profit? Then invest) → Sense check (benchmarks and cash flow). Beside it, a note: Gartner 2025: average marketing budget 7.7% of revenue, mainly large firms; half spent 6% or less.
Making the budget real
Once you have a figure, treat it like any other fixed cost. Put it in the budget at the start of the year, split it by month and protect it from being raided when cash is tight. If you must cut, reduce rather than stop, and know in advance which activities you’d keep.
Then track what it delivers. Ask every new customer how they heard about you. Compare enquiries and sales with marketing activity month by month. Over a year, you’ll build a far better sense of what it costs to win a customer, which makes next year’s budget easier and more confident.
A few questions can help:
- What is our marketing budget for the next twelve months, in rand, before the year starts?
- How many new customers do we want, and what does it typically cost to win one?
- How does our spending compare with typical benchmarks for businesses like ours?
- What minimum level of marketing will we protect, even in a tough month?
Which brings us back to the engineering firm and its “whatever’s left over” budget. If the owner worked out that she wanted ten new industrial clients next year, that each was worth well over R100,000 in profit, and that winning one typically took around R15,000 of marketing, a budget of about R150,000 would suddenly look less like a cost and more like one of the best investments she could make.
Sources
- Gartner, “Gartner 2025 CMO Spend Survey Reveals Marketing Budgets Have Flatlined at 7.7% of Overall Company Revenue”, 12 May 2025. Detail on half of CMOs reporting 6% or less from Campaign Asia.
- US Small Business Administration guideline of 7–8% of revenue for businesses under $5 million, as widely reported in secondary sources (for example Boomcycle).
