Creating the right IT budget for your business

IT budget

In an economy driven by digital technology, all businesses need an IT budget of some sort. A budget that provides for the IT needs of one business, though, may not necessarily work well for another. To create a successful IT budget, you need to take the unique needs and characteristics of your SMB into account. Here are five tips you can use to make sure your next IT budget is exactly what your business actually needs.

Consider spending as a percentage of revenue

All businesses have slightly different IT needs. However, it can be useful to check on other SMB’s. The average share of revenue that other SMBs spend on IT can be a useful benchmark. For the average small business, 6.9 percent of revenue is allocated to IT spending, while medium-sized businesses spend about 4.1 percent. If your existing IT budget has you spending considerably more than businesses comparable to your own, it may be time to consider reducing your IT costs.

Take the cost of old technology into account

It can be tempting to put off hardware upgrades in order to save money in your IT budget. This approach, however, could actually be costing you much more than it saves you. Reduced performance and increased downtime from old hardware can impose costs on your business that far outweigh the cost of upgrading. In total, outdated technology is estimated to cost American businesses almost $2 trillion each year. Using outdated technology also increases your vulnerability to cyber attacks, potentially adding to the costs of network security for your business.

Look at cloud solutions

One of the best ways to stretch your IT budget with improved technology is to start using cloud solutions for your company’s data. Cloud computing provides SMBs with economies of scale when it comes to server technology and prevents them from paying for infrastructure they may not be using to the fullest. As an added benefit, cloud solutions are more energy-efficient than in-house servers. This will allow you to save money on your energy bills when you make the switch.

Ask your team what they need

As with the creation of any other budget in your business, it’s important to ask your team members for input when creating your next IT budget. Members of your tech staff will often have insights to share that will make your IT spending more effective. You should also talk to other teams within your company. Find out what technological tools they need to do their jobs more effectively.

Consider managed IT services

If you’re looking to make your IT budget more efficient and streamlined, managed IT services may be worth looking into. With a managed services provider, you can outsource your essential IT tasks for a flat fee, freeing you up to focus on the growth and productivity of your company. Between a more predictable fee structure and lower costs on in-house IT labor, an MSP can help you save money and make the most of your IT budget.

As a small business owner, you must be able to strike a balance. Being cost-effective and getting the technological tools your company needs to thrive are both important. With these five tips, your next IT budget can strike that balance and help your business succeed.