How Much Should an Owner-Managed Business Budget for Sales Each Year?

Owners often ask this question hoping for a benchmark — a percentage of turnover that other businesses in their sector supposedly spend on sales. Be wary of anyone who hands you a confident number here without knowing anything about your business; there isn't a reliable, generalisable figure, because sales cost is driven by sales cycle length, deal size, and how far the business currently is from the revenue it wants, none of which is standard across sectors.

What is genuinely useful is a way of working the number out for your own business, using your own figures. That's what this article sets out, with the arithmetic kept deliberately illustrative rather than presented as data.

Why isn't there a standard percentage?

A business selling £500,000 bespoke installations with a nine-month sales cycle has an entirely different cost structure to one selling £2,000 subscriptions with a two-week cycle, even at identical turnover. Sector benchmarks that get quoted around — "spend 8% of revenue on sales" — average over businesses with wildly different sales motions, which makes the average close to meaningless for any individual business.

What should the budget actually be built from?

Rather than starting from a percentage, start from the outcome you want and work backwards through the mechanics of how you actually win business. The building blocks are: the additional revenue you're aiming for, your average order value, your realistic win rate on qualified opportunities, and the cost of the people and activity needed to generate enough qualified opportunities to hit that target.

A worked, illustrative example

Say a business wants an additional £300,000 of revenue next year. Its average order value is £15,000, and — based on its own historical figures, not an assumed industry rate — it wins roughly one in four qualified opportunities it quotes. That means it needs roughly 20 orders, which means it needs to generate and properly qualify around 80 opportunities across the year. This is illustrative arithmetic to show the method, not a benchmark to copy — the numbers only mean anything once you replace them with your own.

What does generating those opportunities cost?

Once you know roughly how many qualified opportunities you need, the budget question becomes concrete: what does it cost, in salary, time and any marketing or lead generation activity, to generate and properly work that number of opportunities? If one salesperson can realistically manage that volume of prospecting and follow-up alongside existing accounts, the budget is largely their cost. If it clearly can't be managed within existing capacity, the budget needs to reflect either an additional hire or a defined amount of external support.

What else needs to sit inside a sales budget?

• People costs: salary, commission or bonus, and genuine on-costs like national insurance and pension.
• Tools: a CRM, if you don't already have one that's actually used, plus any quoting or proposal software.
• Time: your own time spent managing, reviewing pipeline and closing larger deals — a real cost even though no invoice arrives for it.
• Any lead generation or marketing spend that specifically feeds the sales pipeline, rather than general brand awareness.
• A contingency for the ramp-up period of any new hire, during which output will be lower than the eventual run rate.

What's the most common mistake owners make when budgeting for sales?

Budgeting for the salary and forgetting the ramp-up cost — the months during which a new hire is learning the business and not yet producing a full pipeline. A more complete budget accounts for reduced output in the first quarter or two, rather than assuming full productivity from day one, which is a discipline covered in more detail when thinking through what to expect from a first sales hire.

When does it make sense to budget for outside help rather than a hire?

If the gap is strategic — deciding which markets to prioritise, restructuring pricing, or building a proper commercial plan — rather than purely about generating more activity, a full-time hire may not be the most efficient way to spend that budget. Fractional commercial leadership can deliver the strategic thinking for a defined number of days a month, which is often a smaller and more flexible commitment than a full-time salary while that strategic work gets done.

If you are not yet sure which of these problems you actually have, the Sales Help for Founders & Business Owners hub sets out the different starting points and which one tends to fit which situation.