Skip to main content

How Small Businesses Can Maximize Marketing ROI on a 7-8% Budget

March 1, 2025
Person writing "audience" on whiteboard | Personalized Digital Marketing Tactics | VIEWS Digital Marketing

For small businesses, marketing isn’t just an additional expense—it’s an essential investment for growth. However, small businesses often need to be strategic with their budget allocations, typically spending 7-8% of their revenue on marketing, according to recommendations by the U.S. Small Business Administration (SBA). This percentage is based on a model for companies earning less than $5 million annually with profit margins of 10-12%, and it’s an amount that can yield impressive results when used effectively. But what does this look like in practice? Let’s break down why this percentage is critical and examine how real companies use it to maximize their marketing activities’ return on investment (ROI).

Why 7-8% of Revenue on Marketing?

The recommendation to spend 7-8% of revenue on marketing is based on the principle that small businesses must reinvest in growth to remain competitive. This level of spending supports essential activities, from digital advertising and social media to local SEO and content marketing. For companies operating with slim margins, allocating even this much can be a challenge, but it ensures they remain visible, relevant, and able to attract potential customers and retain current ones.

The Impact of Marketing on Revenue Growth

Marketing is more than just an expense—when done well, it’s a revenue-generating activity. Studies show that companies investing in marketing see up to 70% faster growth than those that don’t invest as heavily. By reinvesting a portion of revenue, businesses can fuel their sales pipeline, nurture leads, and solidify customer loyalty.

See How We Helped a Real Landscape Design Company Grow

How Does a Landscaping Business  Thrives on an 8% Marketing Budget

Imagine a small landscaping business, “The Green Thumb,” based in Austin, Texas. With annual revenues of $750,000, they allocate approximately $60,000 (or about $5,000 per month) to marketing—representing 8% of their revenue. Here’s how they might strategically divide their budget and achieve positive results.

Breakdown of “The Green Thumb” Marketing Budget

  1. Digital Advertising (30% of Budget – $1,500/month) In this example, The Green Thumb would invest in Google Ads and Facebook ads, targeting local homeowners in neighborhoods with high homeownership rates.
    • Potential Result: In six months, this approach might generate 200 leads, with 35 converting into clients, adding approximately $80,000 to their revenue—an excellent return on their investment.
  2. Local SEO and Website Management (25% of Budget – $1,250/month) With a quarter of their budget, The Green Thumb could focus on optimizing local SEO through a polished Google Business Profile, blog posts with seasonal landscaping tips, and customer reviews to help improve search engine rankings.
    • Potential Result: Within three months, this digital marketing strategy might boost their rankings for searches like “Austin lawn care,” increasing website traffic by 40% and generating regular quote requests from local prospects.
  3. Social Media and Content Marketing (20% of Budget – $1,000/month) Social media could showcase “before and after” photos of their projects, customer testimonials, and seasonal landscaping promotions. A small portion of the budget might also go toward creating short, engaging videos on eco-friendly lawn care practices.
    • Potential Result: By using consistent content, The Green Thumb might see a 150% increase in social media engagement, with 30% growth in follower count. This could lead to 15% of new customers mentioning that they found The Green Thumb through social media.
  4. Email Marketing and Customer Retention (15% of Budget – $750/month) With segmented email lists, The Green Thumb could send tailored email campaigns to current and previous customers, including seasonal reminders and special offers.
    • Potential Result: Such marketing efforts might improve customer retention by 20%, helping The Green Thumb maintain steady revenue even during low-demand months.
  5. Community Sponsorships and Local Partnerships (10% of Budget – $500/month) The Green Thumb might also sponsor a local Little League team or collaborate with local nurseries, allowing them to connect with residents and gain positive exposure in the community.
    • Potential Result: Community partnerships could drive word-of-mouth referrals and increase new client inquiries, with about 10% of new clients discovering them through local sponsorships or partnerships.

Increased Revenue and Brand Presence

Through these strategic budget allocations and data-driven decisions, The Green Thumb could hypothetically achieve a 25% year-over-year revenue increase. Their client base might expand by 30%, and their consistent online presence could help sustain a steady stream of leads even during slower seasons.

Key Takeaways for Small Businesses

    • Targeted Digital Advertising Pays Off: Focus on the advertising platforms and high-performing channels that effectively reach your ideal audience. The Green Thumb’s success with Google Ads shows that careful targeting can bring high-quality leads without blowing the budget.
    • Local SEO is Essential: Small business owners can significantly increase their companies’ visibility without hefty advertising costs by optimizing for local searches. This is especially beneficial for home services and other location-based businesses.
    • Leverage Content Marketing for Engagement: Even with a modest budget, engaging content on social media can improve brand awareness and help build a loyal following.
    • Prioritize Retention Marketing: Retaining customers is often more cost-effective than acquiring new ones. Personalized email marketing campaigns can keep your brand top-of-mind, improve retention, and lead to repeat business.
    • Community Involvement Drives Referrals: Building connections in your community can enhance brand recognition and lead to organic growth. Community sponsorships, as The Green Thumb demonstrated, can be a powerful tool for generating goodwill and new business.

    Wrapping Up: Making 7-8% Work for You

    Allocating 7-8% of revenue to marketing spend may seem conservative, but it’s a balanced, manageable way for small businesses to build recognition and drive growth. Careful budget allocation and strategic investment in high-ROI areas can transform a small business’s presence and profitability.

    In today’s competitive landscape, small businesses that invest wisely in marketing will build more than awareness—they will create a foundation for long-term growth. If you’re ready to make the most of your marketing dollars, consider these insights and strategies as you work to grow your brand.

    Proven Success

    For Burkholder Brothers, traditional marketing was no longer working and they needed a new approach. VIEWS analyzed their business and online presence and created a digital marketing strategy that is driving leads into their business. See what they experienced within the first year of implementing a well-rounded digital marketing strategy.

    Show me the Money
    460%

    Overall website visits compared to the previous website traffic

    1,171

    Conversion goals with the first email campaign

    1,492%

    Increase in Social traffic

    VIEWS Digital Marketing Solutions

    VIEWS digital marketing solutions can significantly enhance your digital presence, reinforcing your sales team’s initiatives. We can help your team plan and execute a customized marketing campaign to get a return on investment.

    Contact Us