I have been in technology sales since the turn of the century. I went through Y2K, sold the benefits of networking, and convinced people that email was the next big thing. Despite all of the technology changes I have seen, there is one scary constant; small businesses ignore budgeting for information technology.
Why is having no budget so scary?
An unexpected breakdown of a single computer, or major server outage can cost thousands of dollars; dollars not readily available to a small business with marginal cash flow. Most small companies I have talked to tell me that their monthly IT expense looks like a roller coaster, with unpredictable ups and downs and unexpected expenditures.
Every company has become reliant on technology and either could not operate without computers, or would struggle greatly. Accounting systems, payroll, email, Internet access, creating documents and spreadsheets, would all go away. To rely on technology to run your business and have no regard for replacing or refreshing that vital technology is scary.
Quite often I have been in conversations with clients that have very definable network needs. I will generally ask them what type of budget they have. Too often the answer is, “We don’t have a budget, can you tell us how much it will cost?” No matter what price I quote, it will always be higher than their budget, which is $0.00.
Servers, new software, personal computers, and overall network upgrades can be very pricey. While there is usually a good return on investment, coming up with the cash to pay for new infrastructure can be very difficult, especially for a small business struggling with cash flow.
How companies should avoid budget scare
Small companies need a technology plan that puts the expense in an operating budget. The latest trend is to “rent” the hardware and software, paying a flat monthly fee that goes unchanged for 3-5 years. This monthly fee includes not only the hardware, software, and initial installation, but provides ongoing maintenance, management, and administration of the computer equipment.
If I own a retail store, I don’t want to spend a lot of money on computer equipment. I would be better off buying inventory with that money that I can turn 4-5 times a year making a profit margin with each turn. That inventory investment generates the profit margin that then is applied to the operational expense of the computer network. More importantly, by creating a monthly operating expense, I have also created a budget.
Break/fix expense can also be scary if not budgeted. A monthly maintenance/management plan from any reputable company will not only pay for break/fix items, but actually reduce the amount of break downs through proactive maintenance. Less break downs means less downtime and more productivity.
Take the scare out of coughing up unexpected cash for computers that crash. Create a refresh and replacement budget by talking with a qualified vendor who can help you determine a monthly budget for what you need, what you want, and what you can afford. The unexpected is always scary, make your technology expenses predictable through proper budgeting and management.