How Much Should a Small Business Spend on Advertising? (UK)

Almost every answer to this question is a percentage. Five per cent of turnover, ten if you are growing, and everyone nods along as though that settles it.

Then you go and apply it to a two-van heating firm and it produces a number that is either laughably small or terrifying, and nobody can tell you which.

The percentage rules are not wicked, they are just built for a different animal. They come from businesses with shelves to clear and a marketing department to run. You are not that.

You are one diary, a phone that has to be answered, and a limited number of hours in a week, and those are the things that ought to be setting your number.

Why there is no percentage that fits you

Two firms on the same industrial estate can turn over the same amount and need wildly different advertising budgets. One does three big commercial jobs a year off the back of relationships.

The other needs forty domestic customers a month and loses half of them to whoever answers first. Same turnover, entirely different problem, and no percentage on earth can tell them apart.

The other trouble with the percentage rules is provenance. The figures that circulate in UK blog posts almost always trace back to American small-business guidance, which was written for a different tax system, a different market and a very different kind of business.

We are not going to repeat a number we cannot stand behind, so here is a method instead. It takes about ten minutes and it gives you a figure you can actually defend.

Start with what you can deliver, not what you earn

This is the bit nearly everybody skips, and it is the only genuinely hard ceiling in the whole calculation. Advertising does not make you money. It makes you enquiries. Somebody still has to answer them, quote them, and do the work.

So the first question is not what you can afford to spend. It is how many extra customers you could take on next month without letting anybody down. A sole trader with four spare hours a week and a firm with two idle vans have completely different answers, and neither of them is a percentage of anything.

Be honest about it too. Advertising into a full diary is the most expensive form of ego there is: you pay for enquiries, you answer them slowly, they book with somebody else, and the only thing you have successfully bought is a worse reputation. Being late to a quote is remembered far longer than never having appeared in the feed at all.

We build for Jade at Classica Beauty, a private studio in South Yorkshire on our portfolio where she sees one client at a time. Her ceiling is not financial, it is the number of chairs in the room, which is one. What she says about the result is the whole argument for treating capacity as the starting point:

Since the new site launched my diary has barely had a gap. The ads and local SEO bring people in, and the site turns them into bookings before I’ve even picked up the phone.

A full diary is the finish line. Once you are there, more advertising spend does not buy more work, it buys a waiting list, and the budget should stop climbing and start being defended instead.

The three numbers you need before you set a budget

None of these require software, an analytics dashboard or a consultant. You can get all three off the back of an envelope in the van, and they are worth more than any benchmark you will find online.

That middle one is where most owners undersell themselves badly. A boiler service customer is not a ninety pound job, she is a ninety pound job every autumn plus the call when the thermostat packs in plus the recommendation to her sister. Price the year, not the visit, and suddenly a budget that looked reckless looks conservative.

The third number is genuinely yours to pick. Spend a tenth of the yearly value and you grow slowly with money in the bank. Spend half and you grow fast with nothing spare if a month goes badly. There is no correct answer, only the one you could survive being wrong about.

Working out your advertising budget in four steps

1. Write down how many extra customers you could serve next month. Not want. Could. Call it C.
2. Write down what a typical customer spends with you across a year, repeat work included. Call it V.
3. Decide what portion of V you are prepared to spend to win one new customer. A tenth is cautious, a half is aggressive. Call it A.
4. Your monthly advertising budget is C multiplied by A. That is it.

Say you are a gardener who could comfortably take on six more regulars. A regular is worth around eight hundred pounds a year in cuts and tidy-ups. You decide a quarter of that, two hundred pounds, is a fair price to win one.

Six times two hundred is twelve hundred pounds a month, and that is your ceiling rather than your target: it is what the work is worth, before you decide how quickly you want it.

Three worked examples

These are invented businesses with invented figures, there to show the sum working rather than to tell you what your trade is worth. Swap in your own numbers as you read.

The beautician is the interesting one, and the reason this article exists. Her sum is correct and her answer is still no. £120 a month sits under the minimum media spend we publish, and at that level a campaign never collects enough responses for the platform to work out who her buyers are.

Our companion piece, the platform-by-platform breakdown of social ad spend explains why those floors are where they are. Her money is far better spent on reviews, photographs and a booking link that works on a phone, and she can come back to advertising when three clients a month becomes eight.

What should not come out of your advertising budget

Plenty of things that grow a business are not advertising, and paying for them out of the ad budget is how owners end up concluding that advertising does not work.

• Your website. It is the place the advertising sends people, not a channel of its own. Budget it separately, once, like a van.
• Your Google Business Profile and your reviews. Free to run, and for most local businesses they out-earn paid ads per pound spent. That is what local SEO covers, and at £300 a month it is a management fee rather than a media buy.
• Your van livery, your uniform, the board on the job. Real advertising in the old sense, but a one-off purchase rather than a monthly commitment, so it distorts the sums if you fold it in.
• Sponsoring the under-11s. Do it because you want to, and put it in a goodwill line where nobody has to justify its cost per lead every quarter.

Keep the advertising budget for money that buys attention this month and stops buying it the moment you turn the tap off. Everything else belongs in a different column, judged by different standards.

Will the platforms actually stick to your budget?

A fair worry, and the honest answer is that they will overshoot on any given day on purpose, then rein it back. Both of the big ones publish exactly how far they will go, which is worth knowing before you watch a Tuesday and panic.

Those are their own published figures, from Meta on daily budgets and Google on spending limits. The practical lesson is the same for both: set the number, then judge it monthly. A daily budget is an instruction about pace, not a promise about Tuesday.

Your advertising is tax deductible, and that changes the sum

Money spent advertising your business is an allowable expense. GOV.UK lists advertising and website costs among the marketing expenses you can claim if you are self-employed, so the real cost of a budget is lower than the figure leaving your account. Worth factoring in before you decide what you can bear.

The same page is equally clear about what you cannot claim, and it catches people out: entertaining clients, suppliers and customers is not allowable, nor is event hospitality, nor are most gifts.

Taking a prospect to the football is a lovely thing to do and it is not an advertising expense. Keep your accountant in the loop and let them draw the line rather than guessing at it.

When you should not spend a penny on advertising

We turn this work down a few times a year, because there are three situations where taking the money would be taking the mickey.

• You have nowhere decent to send people. Paying for attention and landing it on a Facebook page last updated in 2023 is buying a bucket with a hole in it. Sort the destination first, then open the tap.
• Nobody can answer the phone. If enquiries sit until the end of the day, the ones that were going to book have already booked elsewhere. Fix answering before you fix visibility.
• You are already at capacity. If you are turning work away this month, advertising is a way of turning away more of it at a cost per rejection. Put the money into pricing, staff or systems instead.

None of those three is a reason to give up on growth. They are just cheaper problems to fix first, and fixing them makes every pound you eventually do spend go further.

How to grow the budget without gambling

Start at whatever you can commit to for three straight months, because a budget that appears and disappears never gets a fair hearing. Then grow it out of what it earns rather than out of optimism.

The rule we give clients is simple enough to do in your head. When advertising wins you a job, put a fixed share of that job’s value straight back into the budget, and only ever increase by a quarter at a time. Slow, boring, and it means a bad month costs you a bad month rather than a quarter.

One more thing worth being deliberate about: pick one channel and let it prove itself before you add another. Start ads, local SEO and a leaflet drop in the same fortnight and you will have no idea which one produced the phone calls, so you cannot sensibly cut anything.

Our paid advertising service is £300 a month to manage, with your media budget paid straight to the platforms. Every fee we charge is listed openly on the packages page, so the sums above can be done against real prices instead of guesses.

Frequently asked questions

Getting to your own number

A small business advertising budget is not a percentage handed down from somewhere, it is a decision about how fast you want to fill a diary you have to work in. Do the four-step sum, be truthful about the capacity line, and you will have a figure that stands up when the quiet month arrives.

If you would rather do it with somebody who has run these numbers for South Yorkshire businesses since 2014, get in touch and we will work through it with you. If the answer turns out to be that you should not be advertising yet, we will tell you that and what to do instead.