Four Tips for Setting Your IT Budget in 2019

If you’re like more than two-thirds of small business owners, setting your 2019 IT budget may be something of a challenge. Here are a few of our tips for setting an IT budget that will position your organization for growth.

For many small businesses, IT budgeting is a challenge because technology is an area outside the business’ core expertise. IT costs can also vary considerably from year to year depending on the company’s rate of growth and business requirements, making budgeting somewhat more challenging than categories that might tend to be more stable and predictable.

However, challenging as it is, we were surprised recently to learn that more than two thirds of small businesses actually don’t have a documented operating budget, let alone a budget specifically for IT. A recent survey by found that of businesses with fewer than 10 employees, 74 percent had no documented budget, while 21 percent of businesses with more than 10 employees did have a documented budget.

IT Budgets Position Businesses for Growth

Mature budgeting processes can help to position a company for growth, and can prevent an organization from making financially detrimental decisions such as either overspending on IT, or spending so little that IT cannot support company growth. So, knowing how to set an IT budget is important for businesses of any size.

Here are a few tips for setting your IT budget this year.

  • Consider Section 179 – Going into 2019, don’t forget that the tax laws for deduction of business property (including hardware and software) have changed. No longer do businesses have to depreciate assets they buy over the course of several years. Instead, they can deduct up to 100% of the cost of technology and other assets (including vehicles) in the first year.
  • Know the Top IT Spending Categories – A recent study by Capterra found that the top four categories for IT spending among small and midsize businesses were digital marketing, finance and accounting software, data and information security, and cloud computing. When setting your IT budget for 2019, make sure to consider your needs in all four of these categories, as well as any others that may apply to your business.
  • Look at Benchmarks – Many organizations aren’t sure what an organization of their size should be spending, so they enter the budgeting process blind. Make sure to seek out data that is available for your industry for clues about what organizations like yours are spending.
  • Estimate Carefully – One of the challenges small and medium sized organizations have when it comes to establishing a budget is accurately estimating revenue and expenses. It’s typical to over- or under-estimate, causing companies to over-spend and put their financial health at risk, or to limit their growth by underspending in key categories. To estimate more accurately, create a budget that includes a conservative and an aggressive scenario.

IT Budget Survey: Please Participate

A recent survey of medium sized businesses found that 80 percent expect to spend as much or more on IT in 2019 as compared to 2018. Small companies are expecting to spend more on hardware, such as new desktop computers or mobile devices, while larger organizations are increasing their spending on cloud infrastructure. Top reasons given for growth in IT spending included the need to upgrade outdated infrastructure, higher priority given to IT projects, increased security concerns, and growth.

We’re curious about what the businesses in our neck of the world are planning to spend on IT this year. Please participate in our IT Budget Survey by clicking the link below. We’ll announce our findings in an upcoming blog.

Participate in Our IT Budget Survey

Contact us for Help With IT Strategy

If IT budgets and strategy are a struggle for your organization, Tolar Systems can help. Our IT strategists can provide insight into how to save money and get the most from your IT expenditures. Contact us today.