Four Keys for Planning a Good Small Business IT Budget

While the chance to lobby for a budget on behalf of your IT team and its goals can be exciting, it can also be a stressful endeavor – especially for the IT manager of a small business or organization that doesn’t have the resources of larger businesses. Balancing the requirements of keeping the IT department running for the next year with long-term goals and projects essential to the company’s growth is a difficult task. Following these four tips will provide you with workable goals, helping you develop a transparent and actionable budget while preparing you for when your desired budget is cut, all while fostering a sense of transparency, involvement, and camaraderie among your IT team.

1. Provide Your Strategic Vision in a Brief Narrative

This is your budget’s version of meeting face-to-face and shaking a potential business partner’s hand. The goals that you hope to accomplish through the budget and your vision for where the IT department needs to go in the next fiscal year are far more than a collection of numbers to you. In order to make sure that your budget and the future of your IT team is seen the same way to others, you need to put a face on your plan with a narrative detailing your strategic vision and goals. In this narrative you also need to show how your plans and goals add long-term value to the rest of the organization. This is your chance to make a good first impression, giving your work the personality it needs before the inevitable monotony of spreadsheets and numbers begins.

2. Split and Itemize Operating and Capital Expenses

Large corporate budgets are almost always broken down into two primary categories: Operating Expenses and Capital Expenses. For the sake of both efficiency and the appearance of professionalism, your budget should be broken down and itemized in the same way.

The term Operating Expenses refers to all potential “keeping the lights on” expenses. These cover all potential ongoing costs such as: software licensing expenses, subscriptions, third party contracts, maintenance and repairs, office expenses, and salaries.

Capital Expenses refer to all growth and development expenses. This is where your long-term plans and visions for the IT department usually come into play. Capital Expenses also cover the costs associated with acquiring new hardware, recruitment, infrastructure upgrades, and starting or acquiring new lines of business.

3. Have a Realistic Priority List

The sad truth of IT budget plans – and nearly all business budget plans – is that you probably won’t get everything you request. While there can be a game of give and take involved, deliberately inflating your budget in anticipation of it getting cut isn’t particularly professional and can look deceptive. For the most part, a bloated budget will get recognized as such and the cuts to it will be even steeper than they would have been otherwise.

As such, it is imperative to have a realistic list of priorities that you and your team decide on prior to the budget meeting. Understand that you may have to make sacrifices, so choose in advance which of your budget needs are must-haves, and which can either be put off or scrapped.

4. Solicit Multi-Level Team Input and Feedback

One of the most important parts of integrating your IT team with the rest of your organization is fostering communication and collaboration among various groups and stakeholders. Having a conversation about organizational needs and goals with groups that your IT team works with closely prior to crafting a budget is a good way to build rapport and camaraderie between teams, fostering the sense that working with your IT team is integral to the organization’s collective success. Whether you opt for one-on-one discussions with stakeholders or a group meeting, soliciting feedback from different areas in your organization will help to reinforce the understanding that IT is the backbone of the entire organization.

In addition to fostering a spirit of collaboration, the perspective of other teams can be crucial in evaluating ways in which the IT department can help the organization as a whole be more efficient, mobile, and integrated. Understanding the needs of other groups within your organization can help you to build solutions to collective problems into your budget, further cementing the necessity of your IT department.