How much should a small business spend on Google Ads?

One of the first questions we get from small business owners is this: how much should I actually be spending on Google Ads? It is a fair question and the honest answer is that it depends. But that is not especially useful, so let us work through it properly.

Why there is no one-size-fits-all number

Google Ads works on an auction. Every time someone searches for a term related to your business, you are competing against other advertisers for that click. The price you pay depends on how many competitors are bidding, how good your ads are and how relevant your landing page is.

A sole trader offering gardening services in Tewkesbury is in a very different auction to a solicitor targeting personal injury cases across Gloucestershire. The gardener might pay 40p per click. The solicitor might pay £15 or more. Your starting budget needs to reflect where you are competing.

The minimum viable budget

There is a floor below which Google Ads simply does not work. If you spend too little, you will not generate enough data for the system to learn and optimise, and you will not get enough enquiries to judge whether the campaigns are actually performing.

As a rough guide, most local service businesses in Gloucestershire need a minimum of £500 to £800 per month in ad spend to run a meaningful campaign. That is not including management fees. That is the money going directly to Google.

At that level, if you are paying £2 to £5 per click (a reasonable range for many local service searches), you are getting 100 to 400 clicks a month. If your website converts at 3 to 5 percent, that is three to twenty enquiries per month. Whether that is enough to justify the spend depends on your margins.

How to think about cost per click in your market

Before you set a budget, it is worth understanding what clicks actually cost in your sector. You can get a rough picture using Google's Keyword Planner, but the real test is running campaigns and looking at the data.

Some ballpark figures for common Gloucestershire business types:

• Trades (plumbing, electrical, roofing): £1.50 to £5 per click
• Professional services (accountants, solicitors, financial advisers): £3 to £15 per click
• Health and wellness (dentists, physios, clinics): £2 to £8 per click
• Home improvement (kitchens, extensions, landscaping): £1 to £4 per click
• Hospitality and events: £0.50 to £2 per click

These are rough numbers and they vary a lot depending on the specific keywords, the time of year and how competitive the local market is. But they give you a starting point for working out what a realistic budget looks like.

What a sensible starting budget looks like

Rather than picking a number from thin air, work backwards from what a new customer is worth to you.

If you run a kitchen fitting business and an average job is worth £8,000, you can afford to spend considerably more per lead than a business where the average transaction is £200. If your typical profit on a job is £2,500 and you close one in four enquiries, you can afford to spend up to £625 per new enquiry and still break even. That tells you a lot about how much you can sensibly put into ads. Our free Google Ads budget planner does this sum for you: put in your job value, how many enquiries you win and what a click costs, and it shows the monthly budget for the number of jobs you want.

A starting budget we commonly recommend for small local businesses that are new to Google Ads is between £600 and £1,200 per month. That is enough to generate meaningful data within the first 60 to 90 days, test what works and begin optimising. It is not a huge number for most businesses, but it is enough to get a real sense of whether the channel performs for you.

What to expect in the first three months

Google Ads does not deliver instant perfection. The first month is largely about data collection. You will get clicks and some enquiries, but you will also discover search terms you had not anticipated, keywords that cost more than expected and ad copy that does not land the way you thought it would.

By month two you should have enough data to start tightening things up: cutting wasteful keywords, improving bids and refining your targeting. By month three, if the fundamentals are right, you should have a clear picture of your cost per lead and whether it makes commercial sense.

Do not judge a campaign in the first four weeks. Judge it at 90 days.

How to scale once you see results

Once you have a campaign that is generating enquiries at a cost per lead that works for your business, scaling is relatively straightforward. You increase the budget and the volume follows.

The trap to avoid is scaling too fast before the campaigns are properly optimised. If you double the budget on a poorly structured campaign, you double the waste. Get the cost per lead right first, then increase spend gradually and monitor performance closely.

A well-run Google Ads account can become the most reliable and predictable lead source a local business has. But it takes time to get there and it requires an honest budget that gives the campaigns room to work.

SearchMaven manages Google Ads for small businesses across Gloucestershire. If you want to understand what a sensible budget looks like for your specific business, get in touch for a free consultation.