"How much should I be spending on marketing?" is the question most owners ask and the one that gets the vaguest answers. The honest answer is that it depends on your business, but there are real benchmarks, and they are enough to give you a sensible starting point.
What small businesses actually spend
Good public data on small business marketing spend is thinner than the internet suggests. Many "average marketing budget" numbers online trace back to a handful of older surveys, or to sources that do not explain where they came from. These are the ones we could trace to a named source.
Canada: BDC
The Business Development Bank of Canada says there is no one-size-fits-all figure. A 2019 BDC survey of more than 1,400 Canadian businesses found that small businesses spend just over $30,000 a year on marketing, businesses with 20 to 49 employees spend about double that, and those with 50 or more often exceed $100,000. As a share of revenue, BDC cites roughly 2% to 5% for companies selling to other businesses and roughly 5% to 10% for companies selling to consumers, because consumer businesses usually need more channels to reach different groups of customers. These figures are in Canadian dollars.
BDC also lists average spending on website and online marketing by company size, which is useful context if you are deciding how to divide a budget:
| Annual sales | Website | Online marketing | Total |
|---|---|---|---|
| Under $2 million | $19,652 | $14,301 | $33,953 |
| $2 million to $10 million | $37,721 | $38,396 | $76,117 |
| $10 million or more | $142,197 | $92,488 | $234,685 |
BDC describes these as averages over the preceding three years. Treat them as a sense of scale, not a target. A small company that has just built a site may spend heavily on the website in one year and very little the next.
United States: the SBA
The U.S. Small Business Administration does not set a fixed number either. Its guidance points to benchmarks from other sources and suggests basing your budget on a percentage of revenue, using projected revenue if you are a startup. It cites one dataset (from 2018) putting average overall marketing spend at about 7.9% of revenue, with business-to-business product companies around 6.3%, business-to-business services around 6.9%, consumer product companies around 9.6% and consumer services companies around 11.8%. It also cites an estimate that the average business spends about 1% of revenue on advertising alone. The SBA's advice is to put more money into what has worked, track results, and not cut marketing when sales slow, since that can deepen the slowdown.
Large companies: Gartner
Gartner's 2026 CMO Spend Survey found marketing budgets averaging 7.8% of company revenue, up slightly from 7.7% in 2025. This is useful as a reference point, but it surveyed 401 marketing leaders in North America, the UK and Europe, and most of their companies had more than a billion dollars in annual revenue. It is not a small business benchmark, though it is interesting that it lands in the same general range.
What to take from the numbers
- Most credible benchmarks fall between about 2% and 12% of revenue.
- Businesses that sell to consumers and to homeowners generally spend more than businesses that sell to other businesses.
- Newer businesses and businesses that want to grow quickly spend more than established businesses that are happy to hold steady.
- Spending nothing is the one option that none of these sources recommends.
What those percentages look like in dollars
Percentages are easy to nod along with and hard to picture. This table shows what a few common percentages mean at different revenue levels. These are examples to help you do your own arithmetic, not recommendations for your business.
| Yearly revenue | At 5% | At 7% | At 10% |
|---|---|---|---|
| $400,000 | $20,000 a year (about $1,700 a month) | $28,000 a year (about $2,300 a month) | $40,000 a year (about $3,300 a month) |
| $800,000 | $40,000 a year (about $3,300 a month) | $56,000 a year (about $4,700 a month) | $80,000 a year (about $6,700 a month) |
| $1,500,000 | $75,000 a year (about $6,300 a month) | $105,000 a year (about $8,800 a month) | $150,000 a year (about $12,500 a month) |
How to set your own budget
Step 1: Start from your goal, not a percentage
Work out how many new jobs or customers you need, and what each one is worth. If you want ten extra jobs a month and the average job brings in $1,800, you are chasing $18,000 a month in extra revenue. That number puts the benchmark in context.
Step 2: Estimate what a customer costs to win
Say you spend $2,000 in a month and it produces 20 enquiries. That is $100 per enquiry. If one in four enquiries becomes a job, you won five jobs for $2,000, or $400 per job. If the average job brings in $1,800, that is $9,000 in revenue against $2,000 of marketing. These numbers are illustrative, and your real figures will differ. What matters is that you know your own: how many enquiries you get, how many turn into jobs, and what a job is worth after your costs.
Step 3: Account for your profit margin
Revenue is not profit. If your margin on a job is 30%, that $1,800 job leaves $540 after costs, so a marketing cost of $400 per job leaves little room. Knowing your margin tells you how much you can afford to pay for a customer without losing money.
Step 4: Choose a starting percentage that fits your situation
- Established, steady customer base and no appetite for growth: toward the lower end of your range, enough to keep your visibility and reputation intact.
- Want steady growth: the middle of the range.
- New business, new service or a new area: the higher end, with the understanding that it takes time to build awareness.
Step 5: Review quarterly and adjust
BDC suggests reviewing spending quarterly and annually against your projections. Put the money where you can see enquiries coming from and reduce what you cannot connect to results.
Where the money should go first
For local service businesses, a sensible order is to fix the cheap, high-impact basics before you spend on anything larger.
- Your Google Business Profile and reviews. These cost mostly time and drive a large share of local enquiries. Google says local results are based on relevance, distance and prominence, and your profile and reviews feed all three. See our local SEO guide for the steps.
- A website that turns visitors into calls. Clear services, real photos, a tap-to-call number and a simple contact form.
- Ongoing local SEO. Citations, links, content and profile management are repeated work that builds over months.
- Paid ads. Search and social ads can bring in enquiries quickly. BDC suggests at least $1,000 a month for search ads such as Google Ads to be effective. Ads need a budget paid directly to the platform on top of any management fee, so plan for both.
- Everything else. Traditional media, sponsorships and print can suit some audiences, but test them in small amounts and track the results.
Common budgeting mistakes
- Cutting marketing when work slows. The SBA warns this can deepen the dip, because the pipeline dries up just when you need it.
- Spreading a small budget across too many channels. A little of everything usually produces nothing noticeable. It is better to do one or two things well.
- Judging by clicks or followers instead of enquiries. Track calls, forms and booked jobs.
- Not asking how customers found you. Asking takes five seconds and gives you the best data you will get for free.
- Expecting results in a week. Paid ads can work within days. Organic work usually takes months.
- Forgetting ad spend is separate from fees. If you hire someone to manage ads, the money spent on the ads themselves is paid to the platform, in addition to their management fee.
Frequently asked questions
What percentage of revenue should a small business spend on marketing?
There is no single right answer. Benchmarks from BDC and the SBA range from roughly 2% to over 10%, depending on whether you sell to consumers or businesses and how fast you want to grow. Home service businesses sell mainly to consumers, so the 5% to 10% consumer range from BDC is a reasonable place to start your thinking.
How much should I spend if I am just starting out?
Start with the low-cost basics, a complete Google Business Profile, a clear website and a simple way to collect reviews, then add paid marketing as cash flow allows. The SBA suggests using projected revenue to set the budget if you do not yet have a revenue history.
Is marketing a cost or an investment?
The SBA describes it as an investment that drives sales rather than a cost. That only holds if you measure it. If you cannot connect spending to enquiries, you are guessing.
How long before I see a return?
Paid ads can produce enquiries within days of launch. Local SEO and reviews usually take months to build. Anyone offering a guaranteed return or timeline is guessing.
Should I hire someone or do it myself?
Many owners start themselves for the basics, then hire help when their time is worth more elsewhere or when they want consistent execution. Ask any provider to show you what they will do each month and how they will report on calls and enquiries, not only rankings.
Where to go from here
Work out your revenue goal, your cost per job and your margin, pick a starting percentage, and review it every quarter. If you would like help building a plan that fits your numbers, Rank Boss offers monthly local SEO packages, website packages, and management of Google Ads and Meta Ads for businesses across Canada and the United States. Tell us about your business and we will help you decide what makes sense.
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This guide is general information, not a promise of results. Rankings depend on your market, competition and many factors outside any one business’s control. Check Google’s current guidelines before making changes to your listing.