I dont know that its so much about budget as about returns.
Any advertising will cost, and often more expensive forms will yield better traffic to your business. Its an equation of whether the dollar investment will return commensurate profits, and also about whether the flow of work from the advertising will do your business good or cause it problems.
I think the trick is to pick advertising that you can control the workflow from. The thing I like about adwords, is that if I get really busy, I can switch it off for a couple of days while I catch up. I have been offered advertising by a couple of companies recently on 'shop-a-dockets'. My concern was that it was a 12 month contract and they were citing something like 10,000 exposures per week. While the returns may have been good, the service issues that may have arisen from not yet having an infrastructure to take on that amount of traffic would have been problematic for me. I use adwords and do mailbox drops with postcards from vistaprint. When things are quiet, I do mailbox drops to supplement google traffic.
Re Adwords: AFAIK how much you will need to bid will depend on what area you are in and how many other companies are bidding (and how much) for the keywords you plan to use.
I probably spend $200 pm with a budget of $15 per day @ $2.09 per click, but its not a good example as prices will vary depending on other factors.
The thing thats critical as I understand it is conversion rate - that is, whether you get phone calls/emails (and therefore paid work) from the ad. You can spend bazillions of dollars on getting clicks but if your website isnt converting those to customers its all a total waste of money, as is page rank, if you can achieve it.
Ive just redone my site so dont have conversion data accrued yet. But say one in three customers (clicks) is a job, and you're bidding $2 per click, its cost you $6 to get that customer. If your website is not so good and it takes 15 clicks, you just spent $30 to get a customer.
Conversion rate is also a function of the geography you set your ads to display at (mine is about 16km radius from home). If its a broader radius and your customers dont want commute, (or its further than you want to go), its wasted clicks.
Its also a function of the networks you display in. I was displaying in the broader network outside of search results (computer forums, other websites), so the clicks you get from those ads is from casual shoppers - people who have clicked out of curiosity. This is probably not going to be as high in conversions as displaying in search results only, where people have searched intentionally for your specific keywords (definitely wasnt for me - kind of like throwing money into a fire).
When I asked for advice Here on this subject someone said 'adwords is a science'. Even Google recommend you continually revise your settings with them to best optimise cost/performance. I think this science analogy is valuable as Adwords is a complex system with lots of potential for success but also equivalent potential to be a money-pit of not set up correctly.
My suggestion would be to think of the financial outlay as a ratio between investment and return, rather than an outright expense. The 'loss' aspect will depend on how well you implement it.
Im sure there are plenty of people here who can advise you more about the more complex aspects. I really only understand the basics.
