The Step-By-Step Guide to Creating a Perfect IT Budget for Your Business
by Mashum Mollah Business Development Published on: 24 July 2018 Last Updated on: 08 November 2024
With the average data breach costing small businesses around $4 million, businesses with an inadequate IT budget could be at risk.
If you’re a small business still building your IT department, you need to take budgeting seriously. The hard work done to build a customer base could be flushed down the drain by lawsuits, a damaged reputation, and customers leaving for competitors.
Here are 4 tips on how to make a smart IT budget.
1. Talk To Colleagues
One of the best ways to get an idea of what your IT budget should be is to talk to your colleagues in the industry you’re in. IT budgets will vary whether you’re in the tech world, sales, or financial industry. You might be surprised to find out how much companies budget for their tech needs.
While you may not be a leader in your industry yet, you’ll benefit from finding out how much you should expect to spend as your company grows. Talking to colleagues is a great way to learn about the mistakes they’ve made in the past so that you can avoid them yourself.
Other people in your industry might also recommend staffers who could bring a lot of value to your organization. Hiring good people from the start is a great way to cut down on your costs. Given that onboarding staff members can cost you hundreds or even thousands of dollars per role, filling the position with the perfect fit saves money.
Study the standards for your industry and don’t cut corners. While you might save a few thousand in security costs now, you could end up paying for it later.
2. How Much Legacy Support?
If you’re a completely new enterprise with no previous products or software to support, you might not be thinking about the long-term. However, as you create new products, there is a need for support in the years following a product’s release cycle. Without adequate legacy support, you won’t keep a dedicated customer base interested in your products.
If you’ve acquired another business or a suite of products to work with, there will be a customer base that knows and loves those products. Since they may be resistant to changes, upgrades, and new releases, you need to keep them happy. If you provide them with the customer service and support they need, they’ll be prepared to adapt your products when they’re ready.
Legacy support shouldn’t be a reason to hire new staff but it’s a reason to train all new staff on your old products. As employees come and go, you’ll save money on your IT budget if knowledge gets passed along from one person to the next. Having to retrain everyone from scratch when a problem arises and no one with experience is around to deal with it could drag work to a grinding halt.
3. Hire for Experience and Certifications
When hiring new staff, you’ll want to find people with a strong resume, who know the languages and hardware you work with. You’ll find many good candidates with strong academic credentials and all the certifications under the sun.
It can be hard to choose between equally qualified candidates.
The first place to start is with their experience.
If someone is certified to work in IT or on the technology that your products run on, it can seem like they’re the right person for the job. However, a candidate who doesn’t have the certification and academic background could be a great fit. They might work for less than someone with a lot of academic degrees to pay back.
What will matter is how your staff performs when things get hectic or challenges come their way. If they know how to adapt, learn new technology, and work quickly with your technology, that can be more valuable than any certifications. The point of your company is to please your customers and the sooner you can deliver, the quicker you’ll get paid, and the more clients you can service.
4. Hosting on Shared Servers
If you’re a small business, you might not need a lot of space to store all of the data that other larger companies require. While you’re getting started, the hardware costs of setting up larger servers and a broad network could be a large initial investment. Without an adequate understanding of your projected growth, you could over- or under-spend.
Overspending means that you’ll be paying for space that you don’t use and services that you don’t need. It can be like a slow leak on your overall IT budget but will certainly add up over the course of the year. Having your business’s website and security needs handled by a hosting company that handles multiple enterprises could save you on staff costs.
However, if you underspend, you could fail to anticipate either how much traffic hits your servers or how large you can grow.
If you don’t have adequate space on a shared server, you could clog up bandwidth and make customer service come to an abrupt stop. A 404 error because of server traffic or inadequate space could cause damage to your bottom line. You only get a few seconds of a new customers’ attention and if your site fails to load quickly enough, you could send customers to your competitors.
Compare different packages offered by major hosting companies and don’t be afraid to negotiate. If you decide to get your own equipment, view here for some estimates of how you could save money by buying used.
Your IT Budget Could Make or Break Your Company
With a poorly structured IT budget, the best company with the best products might not make it. Making sure you’ve got the right amount of support without wasting any money will ensure that your company is future proof.
If you’re going to be taking out a loan to build your business, check out our guide for what to consider before you sign on the dotted line.
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