Ken "Mr. Biz" Wentworth
That is a great and common question!
It somewhat depends on how "digital" your business is. However, in today's day and age, most businesses are "digital" in nature. You want to ensure you are top-of-mind with potential customers/clients. In addition, overall marketing is definitely a "spend money to make money" proposition. You should expect to achieve a minimum of a 300% return on your overall marketing spend. In other words. if you spend $1,000 on marketing, over time you should see a direct $3,000 increase in revenue as a result of that spend. If not, re-evaluate your marketing efforts.
That being said, I recommend businesses spend 2-15% of annual revenue on overall marketing/advertising expenses. Of course, SEO would fall into that category. It just depends on how you want to allocate your overall marketing dollars. It is difficult to determine that split (SEO vs. overall) without knowing the specific business type. When times are tough and you need to keep your expenses tight, you should still expect to spend a minimum of 2% of your annual revenue on marketing expenses. On the flip-side, if you are looking to grow your market share, you can spend up to 15% of your annual revenue on marketing. It really just depends on where your business is in its life and success cycle.
Specifically to SEO - use the percentages I mentioned above and subtract any other "marketing expenses" you have to ensure you are within your 2-15% range. But again, you should expect the same 300% return on your SEO spend. If you cannot attribute a 300% increase in revenue for your SEO spend, you need to re-evaluate your SEO investment - either hire an expert to help and/or terminate your existing SEO source (even if and especially if it is you!).
Finally, please keep in mind, SEO campaigns sometimes take time to kick in. This is a marathon, not a sprint. As you or your hired expert are refining your A/B splits, etc., it will take time. If you hire someone, give them 90 days to show results that are, if not realizing, at least progressively trending towards the 300% return mark.
I hope that helps! Please reach out if I can clarify my answer or help further.