Is 5 to 10 percent of turnover the right marketing budget?

It is a reasonable planning figure for a company large enough to have a marketing function and a stable turnover to take a percentage of. For a business turning over a few hundred thousand with thin margins, the percentage produces a number that is either too small to do anything with or large enough to hurt, and it ignores the one that decides it, which is what a new customer is worth to you.

Should I spend on advertising or on being found?

Being found first, in almost every case. Advertising into a weak profile and a slow website buys expensive disappointment, because the money brings people to something that then loses them. Fix the path, then advertise into it. That order costs less and works better.

What is a realistic monthly marketing spend for a high street business?

It depends entirely on what a customer is worth and how many you need. A salon whose average client returns six times a year can justify far more per enquiry than a shop selling a single low-margin item. Start from the value of a customer rather than from a percentage, and the number tends to argue for itself.

Do I need a marketing budget at all if word of mouth works?

Not urgently, and I would rather say so. Word of mouth is the best acquisition there is and it has one weakness, which is that it does not reach people who have just arrived. If your area is changing, the budget question is really about whether you want the new residents as well as the established ones.

← Notes from the street

MARKETING · 5 Sept 2026 · 8 min

How much should a small business spend on marketing?

The percentage-of-turnover rule that gets quoted at independent businesses was built for companies with marketing departments, and it breaks at the scale most high street businesses actually operate at. We set out a more useful way to size a budget, and the two figures worth knowing before you commit to anything.

Matthew · No11 Studio

The number people quote is five to ten percent of turnover. It gets repeated because it is easy to say and it is not exactly wrong, but it was built for companies that have a marketing department, a finance function and a turnover stable enough to take a percentage of.

Apply it to a café doing three hundred thousand a year on thin margins and you get a figure that is either too small to buy anything useful or large enough to be frightening. Neither helps you decide.

Start from what a customer is worth

The more useful question is what one new customer is worth to you over the time they stay. Not what they spend on the first visit. What they are worth over a year, or however long people typically stay with you.

A salon client on a six week cycle at fifty pounds a visit is worth several hundred pounds a year. A restaurant regular who comes monthly with a partner is worth something similar. A trade doing one bathroom is worth that job and then the neighbour who saw the van.

Once you have that number, the budget question changes shape entirely. You are no longer asking what percentage feels responsible. You are asking what you can afford to spend to acquire someone worth that much, and how many of them you want.

Two numbers, then. What a customer is worth, and how many more you want.

If a customer is worth four hundred pounds a year to you and you would like ten more of them, the arithmetic gets straightforward quite quickly.

The second figure worth knowing

The other number is how many enquiries you currently get, and where from. Most owners have a feeling about this and very few have the figure.

It matters because it tells you whether you have an acquisition problem or a conversion problem, and they cost completely different amounts to fix. If forty people a month find you and two book, spending more on being found is throwing money at the wrong end. If four people find you and three book, you are excellent at converting and nobody can see you.

I would rather establish which of those you have before anyone quotes you for anything, which is most of what the free audit is for.

Fix the path before you buy traffic

There is an order to this that saves people a great deal of money.

Advertising is the fastest lever available. It is also the least forgiving, because it multiplies whatever it points at. If it points at a profile with no photographs and a site that takes eight seconds to load on a phone, you have bought a larger audience for a worse experience.

Every time I have seen advertising work properly for a small business, the profile and the booking path were sorted first. The Forest Gate dog groomer we worked with saw leads up 212% in the first quarter, and the advertising did that, but it did it into an enquiry path that had already been rebuilt. The same spend into the old setup would have produced a fraction of it.

What to actually commit to

Three sensible shapes, depending on where you are.

Nothing yet. If word of mouth is filling your diary and your area is not changing, spend the money on the business rather than on marketing it. This is a real answer and it is the right one more often than anybody selling marketing will tell you, and I sell marketing.

A fixed monthly amount for being found. The profile, the listings, the reviews, the site. It is the least glamorous spending you will do and it compounds, because a profile kept current for two years beats one built brilliantly and abandoned.

That, plus advertising when the path is ready. Advertising is a tap. Turn it on when the thing it points at can handle the traffic, turn it down when you are full. Treat it as a variable cost rather than a commitment.

The question to ask whoever quotes you

What happens if this does not work.

A good answer names what would be measured, when it would be reviewed, and what would change as a result. A poor answer talks about brand awareness and the long term. Both are legitimate things. Only one of them can be checked in six months, and at this size you need the one that can.

Our own plans and prices are published for exactly that reason, and the audit is free so you can judge before you commit.

Questions people ask

Is 5 to 10 percent of turnover the right marketing budget?: It is a reasonable planning figure for a company large enough to have a marketing function and a stable turnover to take a percentage of. For a business turning over a few hundred thousand with thin margins, the percentage produces a number that is either too small to do anything with or large enough to hurt, and it ignores the one that decides it, which is what a new customer is worth to you.
Should I spend on advertising or on being found?: Being found first, in almost every case. Advertising into a weak profile and a slow website buys expensive disappointment, because the money brings people to something that then loses them. Fix the path, then advertise into it. That order costs less and works better.
What is a realistic monthly marketing spend for a high street business?: It depends entirely on what a customer is worth and how many you need. A salon whose average client returns six times a year can justify far more per enquiry than a shop selling a single low-margin item. Start from the value of a customer rather than from a percentage, and the number tends to argue for itself.
Do I need a marketing budget at all if word of mouth works?: Not urgently, and I would rather say so. Word of mouth is the best acquisition there is and it has one weakness, which is that it does not reach people who have just arrived. If your area is changing, the budget question is really about whether you want the new residents as well as the established ones.