IT Budgeting Best Practices for Small Business

May 14, 2020

3 min read

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Businesses, small or large need technology to operate, it is a must-have tool that directly impacts the success of your business. That is why IT budgeting is important when you do business planning.

Unfortunately, for small business owners, understanding and creating an effective IT budget can be a bit of a challenge especially in this ever-shifting world of IT.

Factors to consider when creating an IT Budget

Creating an IT budget can be tricky especially for first-timers, but with proper research and understanding of your organizational structure along with these key factors, you will be able to start creating a cost-effective plan.

Current IT Infrastructure

Begin your IT budgeting by listing down your current IT assets - software, hardware, servers, printers, phone systems, network infrastructure, devices, etc.

What infrastructure are you currently using? Your budget depends on the size of your infrastructure. Small organizations tend to prioritize upgrades and expansions to boost efficiencies.

Business Requirements

Your IT needs varies on the size of your operation, what technology do you require to keep your business going, short-term and long-term? Are there any expectations your current infrastructure doesn’t meet?

Determine IT-related goals for your business, it’s not only an assessment of your current structure but forecast potential needs to account in your IT budget.

Long-term Vision

The long-term vision will play a vital role when planning your IT budget. If you’re only thinking of the short-term vision, then your IT budget will change drastically as the demands will increase.

It is important to know that your IT Infrastructure will support your future vision if you are expecting a rapid growth of your business.

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IT Budgeting Best Practices For SMBs

Some of the best practices we follow when planning an IT budget include:

1. Aligning with your business goals

Be smart and don’t rush on your IT Investments just because you want to adapt to the latest trend in technology. When it comes to your business, ensure that you are truly investing in the right technology that will support your goals and needs.

2. Be outcome-based

Business owners tend to focus on what type of equipment they need, rather than the result they require for a piece of equipment to achieve. Focusing on outcomes will allow you to consider several solutions, for instance, instead of replacing your server, think of what other solutions can meet your employee’s needs for storage data.

3. Be Inclusive

Yes, it is your business, but that doesn’t mean that you are the only one affected by the changes. Seek the view of your people and you might get important insights on what can work that will help with your IT budget planning.

4. Reviewing your budget

Look at the results and you will see where your business overspent or underspent. Be proactive so it will be easier for you to create a budget the next time you need it. Reviewing the budget will also help you see what works and what doesn’t, or what set up needs to change.

5. Plan for Disasters

Allocate a disaster fund outside your standard budget, it will cost you more if you don’t set aside some of the budget and a disaster strikes.

The Don’ts of IT Budgeting

Don’t stick to a fixed number as it will limit your vision. Forecast upcoming projects and consider multiple procedures.
Don’t go too complex, or too generic. There’s always a balance when creating a budget. If you think that your budget is too simple, you can always add little details that will allow you to see where your money is going.
Don’t wait for a piece of equipment to break before replacing it. You will waste time and resources waiting for it to be fixed.