How Much Should a Small Business Spend on Google Ads?

Most small businesses pick a Google Ads budget the way they pick a broadband package: a monthly figure that feels tolerable. That is the wrong starting point, because the budget is an output of your commercial numbers, not an input.

Work it out from the back end instead — from what a customer is worth to you — and the number stops being a guess.

Start with what a customer is worth

Take your average order value, your gross margin, and how many times a typical customer buys before they disappear. That gives you lifetime gross profit. If a customer is worth £4,000 in gross profit over three years, you can afford a great deal more to acquire one than the £30 click that frightened you.

Work backwards through the conversion chain

1. 01Clicks to enquiries: on a decent landing page in B2B, somewhere between 2% and 10%.
2. 02Enquiries to qualified opportunities: often only half, and worse if targeting is loose.
3. 03Opportunities to orders: your own quote conversion rate, which you should already know.

If 100 clicks at £4 produce five enquiries, three of which are worth quoting, and you win one in three, that is one customer per £400 of spend. Against £4,000 of lifetime gross profit, spending more is obviously correct. Against £300, it is obviously not.

Budget for enough data, not just enough exposure

A campaign needs a meaningful number of conversions each month before anyone can optimise it honestly. If your realistic cost per lead is £80, a £300 monthly budget produces three or four leads — not enough to tell skill from luck. In that situation it is usually better to advertise hard on a narrow set of high-intent terms than to spread thinly across everything.

Decide the ceiling before you start

Agree a maximum acceptable cost per qualified lead and a maximum cost per acquired customer in advance. Once those numbers exist, budget conversations become arithmetic rather than nerve. If the campaign comes in under them, spending more is a growth decision. If it comes in over them, no amount of optimisation theatre will change what the account is doing.

Remember the spend after the click

The advertising budget is not the whole acquisition cost. Slow follow-up, weak quoting and no reactivation of unconverted enquiries quietly inflate what each customer costs. Budgeting for ads without budgeting attention for what happens after the enquiry lands is the most common way small businesses waste money on Google.