Setting your marketing budget: how much should an SME really spend?

Ah yes, the age old question…how much should we actually be spending on marketing?

Google it and you'll get a hundred different answers. "5% of revenue." "10% minimum." "Whatever you can afford." None of it particularly helpful when you're trying to build a real business with real overheads and real growth targets.

So here's the straight-talking guide you actually need. No fluff. No "it depends" cop-outs. Just practical, financially-focused advice for setting a marketing budget that makes sense for where you are and where you want to be.

The benchmark numbers 

Let's start with what the data actually says.

For 2026, SMEs should be allocating somewhere between 7.7% and 15.6% of revenue to marketing. That's a wide range, we know: but here's how it breaks down:

• Smaller companies (under £10 million turnover): Typically invest around 15.6% of their budget. Why? Because you're still building awareness, still proving yourself, still fighting for every bit of market share.

• Mature, established SMEs: Can often operate efficiently at 5-15% of revenue. You've got brand recognition, repeat customers, and word-of-mouth doing some heavy lifting.

• High-growth or scale-up mode: Push toward 15-30% if you're aggressively chasing market share. This is "land grab" territory.

The key word here is revenue, not profit. We're talking top-line, not what's left over after you've paid for everything else.

Why ‘whatever’s left over’ is a terrible strategy

Here's what we see all the time: businesses treat marketing as an expense to be minimised rather than an investment to be optimised. The budget gets thrown at some of this and that rather than invested strategically. Owners want to see instant results (which there rarely ever are), then then they wonder why growth has flatlined.

Marketing is not a cost centre. It's a growth engine.

The businesses seeing 33% higher revenue growth are the ones using data-driven allocation strategies. They're not guessing. They're not treating it as an afterthought. They're building it into the financial plan from day one.

If your current approach is ‘let's see what's left in Q4’ or ‘that’s expensive’ then you're leaving money on the table and you’re letting your competitors get ahead. 

The 70-20-10 rule

Once you've got your overall budget figure, the next question is: where does it actually go?

Enter the 70-20-10 rule. It's beautifully simple:

• 70% goes into proven channels: the stuff you know works. The activities that consistently generate leads, build awareness, or drive sales. Don't get bored with what's working.

• 20% goes into promising opportunities: channels or tactics showing early results but not yet proven. This is your testing ground for tomorrow's 70%.

• 10% goes into experimental initiatives: the wild cards. New platforms, emerging trends, creative campaigns that might be brilliant or might be a total flop. This is where innovation lives.

One caveat: If you're working with a smaller budget (under £5,000 per month), shift this to 75-15-10. Concentration beats diversification when resources are tight.

Channel distribution: where should the money actually go?

This varies depending on your business model, but here's a practical framework based on a £10,000 monthly budget:

For B2B Businesses:

The common thread? SEO and content are non-negotiables across both. They compound over time. The ad spend you make today disappears tomorrow. The content you create today keeps working for years.

The minimum viable budget (don't go below this)

Here's a brutal truth: there's a floor below which marketing spend becomes almost pointless.

You need at least £1,000 per month, per channel to gather enough data to actually optimise anything. Spread £2,000 across five channels and you've got £400 each: not enough to learn what's working, not enough to scale what succeeds.

If your total budget is under £5,000 per month:

• Pick 1-2 channels maximum

• Paid search is usually your best bet for immediate revenue

• Add one organic channel (content or SEO) for long-term compounding

If your budget is £5,000+ per month:

• You can effectively power 3-4 channels

• Add email marketing and content strategy to your mix

• Start building that 70-20-10 portfolio properly

The worst thing you can do is spread yourself thin and wonder why nothing seems to move the needle.

Tying budget to growth goals (the bit everyone forgets)

Here's where most budget conversations go wrong: they're completely disconnected from business objectives.

Your marketing budget shouldn't be a random percentage pulled from an article (even this one). It should be reverse-engineered from your growth targets.

Ask yourself:

1. What's our revenue target for 2026? Let's say £2 million.

2. What's our current customer acquisition cost? If you don't know this number, stop everything and figure it out. Let's say it's £500.

3. How many new customers do we need? If average customer value is £10,000, you need 200 customers to hit £2m.

4. What's the budget required? 200 customers × £500 CAC = £100,000 marketing budget, or roughly 5% of target revenue.

This is a simplified example, but the principle is sound: start with the outcome, work backwards to the investment.

What other SMEs are actually doing in 2026

You're not alone in thinking about this. Research shows 92% of small businesses are maintaining or increasing their marketing budgets heading into 2026. The confidence is there.

Where's the money going?

• Over 50% plan to invest more in video marketing

• 47% are targeting increased spending in search and social advertising

Video isn't optional anymore: it's expected. And paid search remains the reliable workhorse for immediate, measurable results.

If you're still relying solely on organic social and hoping for the best, you're bringing a knife to a gunfight.

The stop-start problem (and why it's costing you)

One more thing before we wrap up.

The most expensive marketing strategy is the one that keeps stopping and starting. You invest for three months, panic about cash flow, cut everything, then wonder why you're back to square one six months later.

Marketing compounds. SEO takes months to build momentum. Brand awareness doesn't happen overnight. Content needs time to rank and circulate.

Every time you stop, you lose that momentum. Every time you restart, you're paying to rebuild what you already had.

Consistency beats intensity. A steady £5,000 per month for 12 months will outperform £30,000 in Q1 followed by radio silence.

Build the budget into your operational costs. Treat it like rent. It's not optional if you want to grow.

The bottom line

Setting your 2026 marketing budget isn't about picking a magic number. It's about:

1. Understanding your growth stage and benchmarking accordingly (7.7-15.6% of revenue for most SMEs)

2. Allocating strategically using the 70-20-10 framework

3. Concentrating spend where it can actually make an impact (£1,000 minimum per channel)

4. Tying it to real business goals, not arbitrary percentages

5. Committing to consistency over stop-start chaos

If you're serious about growth, your marketing budget deserves the same rigour as your financial forecasts, your hiring plans, and your operational strategy.

Because here's the thing: your competitors are investing. 92% of them are maintaining or increasing spend. The question isn't whether you can afford to invest in marketing.

It's whether you can afford not to.

Need help building a marketing strategy that actually delivers ROI?

Get in touch: we're the no-nonsense agency that treats your budget like it matters. Because it does.