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What is the average marketing budget for a small business?

How much you should spend depends on your revenues, market and who you need to reach


Every business needs to do marketing to attract customers, increase sales and compete better. But a lot of small business owners struggle to know just how much money they should be spending.

BDC Business Advisor Jessica Horvath says there’s no one-size-fits-all answer. “So much depends on the kind of business you have, your business objectives and revenue.”

That said, she offers these tips for coming up with a marketing budget that fits your small business.

1. Start by researching your industry

In the simplest terms, your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend between 2 and 5% of their revenue on marketing.

For B2C companies, the proportion is often higher—between 5 and 10%. This is because B2C companies typically need to invest in more marketing channels to reach various customer segments.

Horvath suggests a good way of narrowing your target budget is to research what’s common for your industry and what your competitors are spending.

A 2019 BDC survey of more than 1,400 Canadian businesses found that Canadian small business marketing costs average just over $30,000 a year, while those with 20 to 49 employees spend twice that amount. Companies with 50 or more employees tend to have marketing budgets in excess of $100,000.

Average investment in websites and online marketing in Canada

2. Set clear goals

It’s important to be clear on your marketing goals—they need to be measurable and specific. Do you want to get more people to visit your website to take a specific action? If so, how many people over what period of time? Do you want to get people to visit your store for a free sample or consultation? What kind of customers would you most like to attract? How many of them do you want to come in?

Setting your goals will allow you to plan what needs to be done—and what kind of investment will be needed.

“Think about your customer segments—the personas you want to reach and what their needs are,” Horvath says.

“Does your value proposition clearly explain how you will address their needs and why they should visit your site or shop? From there, you can decide how best to design your marketing campaigns to create offerings that are more likely to lead to sales.”

Once you’ve defined your budget and put your plan into action review it on a consistent basis to analyze whether your spending is achieving the goals you set.

Jessica Horvath

BDC Business Consultant

3. Consider all your potential costs

Like any business expense, marketing has many components. Horvath suggests allocating your marketing budget to each of the following categories. You can adjust the amounts over time based on what’s most effective.

Website: The cost of your website includes the original design and build as well as monthly hosting. It also includes paying to keep the content fresh and up to date. “Make sure your site has analytics built in,” Horvath says. “That way, you can track who’s coming and from where—information that will help you identify how your other marketing investments are paying off.”

Social media: Set aside some money to invest in online advertising through social media platforms that make sense for your business like Facebook and LinkedIn. Even if your social media traffic is all organic—attracted by the content you post—creating that content requires resources you’ll want to account for.

Online advertising: For search engine advertising like Google Ads, plan for a minimum $1,000-a-month investment to be effective, Horvath says. As you monitor and refine your online advertising, you’ll be able to budget more accurately.

Traditional media: While digital advertising tends to be more budget-friendly, traditional advertising, radio, print and TV still have value depending on who you’re trying to reach. Consider your resources and how you can get the most from the budget you have.

E-newsletters: Sending regular updates to clients who have opted to receive communications from your business helps keep your company top-of-mind and encourages repeat business. Planning for, writing and using online tools to send out this material all require time and resources.

Video: In Horvath’s view, every small business should try to use video for marketing. The costs involved can include everything from hiring a camera person and editor to simply upgrading your smartphone so you can shoot video yourself.

Training: If you rely on internal staff to create and execute your marketing campaigns, be sure to set aside funds for training. “The available channels continue to evolve and it takes training for your staff to stay on top of the best practices,” Horvath says.

4. Keep track of costs and adjust regularly

As you work through your marketing budget line by line, it will become clearer what you can afford, according to your priorities. Keep track of your costs and review web analytics regularly.

Assess your marketing budget quarterly and annually to see if your projections are aligned with your actual spending. By monitoring your marketing costs and refining your efforts, you will be able to generate more accurate budgets as time goes on.

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