While you probably set general budgets within your small business to help you reach your goals, you may not have considered creating a separate IT budget to get a better handle on your tech-related spending.
Don’t worry—you’re certainly not alone. Many smaller businesses fund IT projects and/or ongoing IT support costs with just a line item or two in broader operational budgets. Others may simply draft up more specific budget allocations and documentation for individual technology initiatives—like significant equipment purchases—less often, or as they arise.
But, you should consider being a bit more intentional about your technology spending by developing a dedicated budgeting process just for IT.
Sound difficult? It doesn’t have to be.
Your IT budget is like a manifestation of your business’s overall IT strategy for the future— whether you’re looking one year ahead or five years ahead. And, our IT budgeting tips in today’s blog post should help you hone your vision. Here’s how to get started.
If you’ve been in business for many years, you likely have lots of prior budget data to look back on. Lucky you! Pay attention to your average technology spending on a month-to-month and annualized basis. Your previous expenses and spending can essentially help you predict the future when you approach that information as benchmarking data.
Resist the urge to just take last year’s budget and plug in similar numbers. Instead, take the time to consider how your technology needs may change and evolve in the coming budget period.
Assess Operational Priorities
Think about technology projects you’d like to accomplish.
These projects need to be planned for, and your IT budget is a great tool to help you do this planning.
Also, know that you don’t have to rely on only internal benchmark data to guide your decision-making. If you have access to any financial or performance data from your closest competitors—or even other businesses of a similar size in other industries—this can help you benchmark your way to an affordable, goal-oriented IT budget.
Not sure how to get that kind of data? This is an area in which a managed IT service partner (MSP) can be extremely helpful, as we assist hundreds of companies just like yours with their budget planning needs. We already know what a small business like yours here in Central PA should be spending on your technology.
Identify your Fixed vs. Variable Costs
Most of your technology costs should be relatively fixed. Equipment like individual computers, printers, copiers, and the like have expected lifespans, and you probably subscribe to ongoing plans for various services like antivirus and network security solutions, enterprise email, your website’s maintenance, and more.
Your regular IT support guy’s fee should be relatively fixed, too—though it might not be. If your current IT service provider works on a traditional “break-fix” basis, for instance, you could have sky-high technology costs one month and then little spending in another month depending on what broke and when. Unfortunately, this model for IT support is not particularly budget-friendly when you’re attempting to plan ahead for a year or more at a time.
Contracting with an MSP instead allows your IT support costs to move from the “variable” column to the “fixed” column, which means you can plan with greater certainty.
Review Aging Assets Regularly
Your physical technology assets like computers, servers, data backup drives, and many others, have defined lifespans and will eventually fail.
Keeping a technology inventory of what equipment you own, when it was purchased, and when it likely needs to be replaced is essential. Review this inventory during regular budgeting activities to see what your budget allocations should be for purchasing new equipment. If you neglect to make purchases on schedule, you could be building up a very expensive backlog that could fail all at once and leave you with a massive bill!
Get Input from Your Team Members – Budgeting Shouldn’t be Done Alone!
As a small business owner or leader, you likely don’t need to justify your budgets to a committee or anyone else for approval, but that doesn’t mean that you should take on the budgeting process by yourself.
Consult managers of various departments or even non-management employees in different roles throughout the company to be sure there aren’t any big unmet needs related to technology. For instance, maybe your warehouse could really benefit from another shipping station to get orders out the door more efficiently. Or perhaps your time-keeping system leaves a lot to be desired and really ought to be updated.
In the end, your IT budget should represent a financial plan for achieving all of your business’s goals related to technology, which likely touches every person and most processes in your operation—don’t forget about these essential resources.
Consider IT Consulting Services
Still unsure about putting together your IT budget? Often, small business leaders are confronted with technology decisions that they are simply not sure how to make based on what’s best for their company as a whole. Even a thoughtful yearly budgeting process and talking with others in your organization could still leave you with questions.
In these cases, your business could benefit from IT consulting services like those we offer here at EZComputer Solutions. Help with IT budget planning and determining the business impact of various technology decisions is an area where managed IT service providers like us excel. Our goal is to save you money while bringing you a better value for your technology dollar.
Get in touch with us today to learn more about how we help small businesses budget better. And, don’t forget to download our free e-book about how you can save on your IT support costs.