Overall, it is estimated that small businesses with moderate technology needs should prepare to invest 3-4% on their annual revenue in technology services and products. Companies that are experiencing substantial change or growth should be looking at spending 5-7% of their revenue. If you are spending lower than this, please consider the implications. You may be neglecting the IT infrastructure of your business, and unintentionally putting your business at risk in terms of security and productivity.
Ask yourself these 5 questions:
1. How essential is IT to your daily operations?
Do you have specialized line-of-business software or website that is used daily? Does every employee have a workstation? How and where is your data stored? How much your business relies on IT throughout a normal business day can help determine your IT spending.
2. What is the growth stage of your business?
Is your business steady, downsizing, or growing? Growth means your business could have heavier technology demands than before. Even if your business is downsizing, it is important that you do not neglect your IT systems or spend less than you should.
3. Is your business experiencing change?
Moving offices, opening a new location, hiring or replacing employees, or going through a merger are all changes that can drastically influence how much you need to be spending on IT.
4. How involved do you want to be in your business IT infrastructure?
Do you plan on taking time to personally updating licenses, installing new software, routinely checking backups, event logs, etc.? If not, then hiring a professional IT company to take of these daily, monthly, quarterly, and yearly maintenance might be a better option.
5. What is your business’ resilience for risk or disaster?
Have you created, tested, and/or updated your business’ disaster recovery plan? If you answered ‘no’ to any part of this question, then your business is not going to be resilient in the event of a catastrophe. It is best to make room in your budget to consult an IT professional to create a disaster recovery plan.