How Much Should a Small Business Spend on Marketing?
By Steady Auto Growth · Published 2025-06-15
The SBA says 7–8% of revenue. But what does that actually look like for a plumber, detailer, or HVAC company? Here's a no-BS breakdown of where your marketing dollars should go.
TL;DR Most local service businesses should spend 7–10% of gross revenue on marketing. If you're under $500K/year, that means $2,500–$4,000/month. New businesses or those in competitive markets should lean closer to 12–15%. The key isn't the exact percentage — it's putting your dollars where they actually generate leads. In This Article The General Rule (And Why It's Only a Starting Point) What That Actually Looks Like in Real Dollars Where to Spend Your Marketing Budget First What NOT to Do With Your Marketing Budget When to Spend More (And When to Pull Back) DIY vs. Hiring an Agency The Bottom Line This is the question every business owner Googles at 11 PM after a slow week: "How much should I actually be spending on marketing?" You'll find a hundred articles telling you "7–8% of revenue" and leaving it at that. Cool. But what does that actually mean when you're a plumber doing $400K a year? Or an HVAC company trying to break $1M? That percentage alone doesn't tell you much. So let's …
Frequently Asked Questions
- What is the average marketing budget for a small business?
- The U.S. Small Business Administration recommends 7–8% of gross revenue for businesses under $5 million. However, most growing local service businesses spend 8–12% when actively trying to increase their lead volume and revenue.
- How much should I spend on Google Ads as a local business?
- Most local service businesses should budget $1,500–$3,000 per month in Google Ads spend (not including management fees) to get enough click volume for proper optimization. Less than that often doesn't generate enough data to see meaningful results.
- Should I do my own marketing or hire an agency?
- If you're doing under $150K/year and have 10–15 hours per week to dedicate, DIY can work. But most service businesses over $300K find that hiring an agency delivers faster results and frees up their time to focus on the work they're best at.
- What marketing channels should I invest in first?
- Start with a high-converting website, then build your Google Business Profile and local SEO. Once those foundations are in place, add Google Ads for immediate lead flow, followed by Meta Ads for broader awareness. Reviews should be an ongoing effort from day one.
- Is marketing an expense or an investment?
- Marketing is an investment when done right. Every dollar should be traceable to leads, calls, or booked jobs. If you can't measure the return on a marketing channel after 3 months, either the tracking is broken or the strategy needs to change.