How Much Should a Small Business Spend on Marketing?

He was spending plenty on marketing. His team of ten was still quiet half the time.

The problem was not how much he was spending. It was where.

I get asked this question more than almost any other. “How much should I spend on marketing?” And almost every article online gives the same answer. Five to ten percent of your revenue.

It is not wrong, exactly. It is just useless.

Every business is different. Every market is different. A plumber in Wakefield and a mortgage broker in Manchester are not going to have the same marketing needs, the same margins, or the same customer journey. Giving them the same percentage and calling it advice is like prescribing the same medication to every patient who walks through the door.

What actually matters is not the number. It is the order.

Before deciding how much to spend on marketing, the first job is making sure the leads you already get are not leaking out the other side.

Fix the Leaks Before You Turn On the Tap

Picture your marketing as a bucket. Every pound you spend is water going in. But if the bucket has holes in it, pouring more water in does not help. It just runs out faster.

Most small businesses have leaks they have never measured.

An enquiry comes in at 5:40pm on a Friday. Nobody contacts them until 9:30am on Monday morning. By then, the buyer has found someone else or lost interest entirely. That is a leak.

A quote gets sent and never followed up. A website visitor fills in a contact form and waits two days for a reply. A happy customer finishes the job and nobody asks for a review or a referral. More leaks.

None of these show up as a line item on a spreadsheet. There is no invoice for the job you did not win. So the leaks just run, week after week, while the owner wonders why the marketing is not working and reaches for the ad budget.

The first job is not deciding how much to spend. It is making sure nothing is leaking out of the bucket you already have.

If response speed is one of those leaks, this breakdown explains how quickly you should respond to leads and why even small delays reduce conversions.

What Happened When One Business Fixed the Bucket First

I spoke with a guy who ran a ten-man plumbing firm. His marketing for new customers was sharp. Good ads, decent website, leads coming in. But his biggest problem was that he felt he constantly had to keep the spend high just to keep his team busy.

As a test, I suggested we set up an SMS reactivation campaign targeting just twenty percent of the clients they had done work for in the past.

The campaign brought in a swell of business. New boiler fittings, servicing, a range of other jobs. All from people who already knew and trusted the company.

The result was that he could reduce his overall marketing spend by twenty percent while getting better results. He shifted to a 70/30 split. Seventy percent of work from new customers, thirty percent from existing ones. Less spent, more earned, and a team that stayed busy without the constant pressure to chase new leads.

He had been paying to find new customers while ignoring the ones he had already paid to find the first time around.

If older enquiries are sitting untouched in your CRM, inbox or spreadsheet, database reactivation can often uncover quick wins without spending more on ads.

What to Check Before You Spend a Single Pound

Before committing any budget, there are a few things every business should look at first.

• How quickly does a missed call get replied to?
• What happens if a lead comes in over the weekend?
• Are quotes and prices followed up?
• Can website visitors get answers in real time, or do they have to wait for someone to respond to a contact form?
• Where do current leads actually come from?
• Are existing customers being asked for referrals?
• Is there an incentive for happy customers to introduce friends and family?

The focus should be on improving something that already works before spending money on something new.

And everything should be measured. If a hundred pounds is spent, what did it produce? How many leads? How many customers? How much revenue? If nobody can answer that question, the spend is a guess, not a strategy.

If your business is already attracting attention but not turning enough of it into revenue, this guide on getting enquiries but not customers explains where many businesses go wrong.

Where the Money Actually Gets Wasted

The single biggest waste I see? Facebook ads (other platforms are available).

Not because the ads do not work. Often they do. The problem is that the business behind the ad does not have the resources or systems in place to handle what comes in.

“Someone will be in touch soon” is not a follow-up system. It is a hope. And hope does not book appointments.

Business owners spend money driving leads to a front door that takes two days to open. The ad worked. The landing page worked. The click happened. But nobody answered the phone, or the form submission sat in an inbox until Tuesday, or the quote went out and was never chased.

The other common mistake is going after cold leads before making sure the warm ones are looked after. Existing customers, past enquiries, old quotes, referral opportunities. These are people who already know the business. They have already been closer to buying than a stranger scrolling Facebook at 10pm ever will be.

It takes far less time and money to convert someone who already knows you than it does to convince a stranger to trust you from scratch. Yet most businesses spend the majority of their budget on strangers and nothing on the people already in their orbit.

The Four Steps (in Order)

If a business owner sat across from me with a coffee and asked “what should I actually do?”, this is the order I would walk them through.

Step 1: Fix the leaks. Work through the lead-to-customer process and find every place where leads could go cold or fall off. The Friday-evening enquiry that waits until Monday. The quote that is never chased. The missed call that is never returned. Find them and fix them.

Step 2: Generate leads at no cost. Existing customers are probably the strongest advocates the business has. Every customer should be asked for feedback after the job, regardless of whether they go on to leave a formal review. Use their feedback to guide marketing. Incentivise them to introduce friends and family. Ten percent off the next service, a referral bonus, whatever fits the business. Get them buying again too.

Step 3: Work the database. Reactivation campaigns work. If there are clients who have not been spoken to for a while, reach out via SMS or email (with permission). If the business offers a repeatable service (car service, boiler service, annual check), set up a system to remind people it is due and that they should do it with you because you did it last time and they were happy.

Step 4: Automate as much of this as possible. Feedback requests, review prompts, reactivation messages, missed-call follow-ups. These do not need to be manual. Systems can handle them consistently, every time, without anyone staying late to make phone calls.

Cold outreach and paid advertising should be the last port of call. Not the first.