How to Budget for Your IT as a Business Owner (Plus Free Template)

Every business owner or financial director knows the struggle of setting up a realistic budget. The future can be hard to predict, especially in uncertain economic times. However, budgeting is crucial to ensure you can keep your business up and running successfully, no matter if you’re a small business with 5 employees or a large enterprise with a 500+ staff. And in today’s modern workplace, including an IT budget is more important than ever.

In this month’s blog we’ll cover the importance of budgeting for your IT department, how much you should realistically budget for at IT as a small business, and we also share our free IT budget template with you to help you get started.

Why you should budget for IT departments

As a small business, it’s very important to forecast your known outgoing costs and ensure you have an IT budget in place to cover them. If you don’t, then you may fall into cash-flow problems generated by the trap of struggling to pay for things that appear “out of nowhere”.  Today’s technology is far more robust and reliable than 10 years ago, but nothing is unbreakable and sometimes these things (more often than not) happen at the worst time possible. Budgeting for your IT is important to ensure you can keep your technology up and running smoothly, protect your data, and invest in cyber security so that your systems are always updated and secure from ever-evolving cyber threats.

What should you include in an IT budget?

There are various things you need to take into consideration when setting up your IT budget, though not all of them might be applicable to your business. Generally, a good IT budget covers costs for:

• Hardware – This doesn’t just refer to the acquisition of new technology but also includes the costs of maintaining and updating your existing systems.
• Software – This includes the licencing for your existing software, potential upgrades as well as any costs relating to the planned purchasing of new software.
• Network – These are the costs from running your business network, and the biggest expense is likely your internet connection.
• Personnel – This includes the cost for your IT team as well as the costs for your managed service provider, should you be working with one or plan to.
• Telecomms – These costs cover your business telephony, whether it’s desk phones, mobiles, or both.
• Miscellaneous – Here is where you list all other costs that aren’t related to the previously mentioned sections, i.e., additional training for your team.
  
  

How much should small businesses budget for IT?

Unfortunately, there is no one-size-fits-all answer to this question. How much you will or should spend on your IT budget depends entirely on your individual business. However, there are a few common factors that will help you prepare. 

On average, small to medium-sized businesses spend around 6-7% of their annual revenue on IT. To visualise this with an example, if you’re running a small business with 30 people and no internal IT department (meaning you outsource your IT needs to an IT partner), you will on average spend between £2000-3000 a month on IT.

Our free IT budget template

It can really hurt your cashflow if you don’t have a well-planned IT budget in place and are struggling with unknown costs. But the good news is: it doesn’t have to be that way!

We’ve put together a basic IT budget template, so all you need to do is modify it for your own needs. We find that this is a great way to manage your known annual costs and also factor in the unexpected ones as well.

If you’re a small business that doesn’t yet outsource your IT support but are managing your own IT in-house or with an external provider on an ad-hoc basis, then this template should make your life a whole lot easier.

Once you’re ready to outsource your IT to help you save time, why not reach out to our experts at Southern IT and give us the job of producing an IT budget for you? We’re happy to help!