Budget (1)

Budgets can either make or break your IT department. You'll either end up with a surplus or a deficit at the end of the year. Which way you land depends whether or not you follow some best practices and avoid the budgetary pitfalls common to business—and particularly to IT.

We've put together some do's and don'ts to help guide you to a successful outcome.

Do plan for disaster

Perhaps one of the biggest traps lurking in the shadows, waiting to take you down! Dramatic, right? Not really. If you don't set aside a portion of your budget for disaster planning, understand Murphy's law will most likely strike! Always maintain a disaster fund, outside your standard budget. Otherwise, you may well find yourself in a spot of trouble when one of those servers goes down.

Don't overestimate your revenue

This is a common pitfall that is easily avoided. We always want to be in a position to predict that our yearly profits will soar above last year's numbers. When that happens, we tend to set our budget accordingly. This can get us into trouble. Instead of predicting a massive (optimistic) spike in revenue, be realistic about it and plan your budget according to those numbers. Underestimate your revenue and overestimate your costs and you'll always be safe.

Do budget for seasonal fluctuations

This can be a challenge, but nearly every industry suffers from peaks and valleys. Some find the summer months to be slow, whilst others feel the hit during the colder months. It's almost impossible to predict just how far those dips will go, so it's worth budgeting with those fluctuations in mind. This also means you need to schedule your spending accordingly. Don't put yourself in the position of having to purchase new technology during a slow period or you may find your department in a bind.

Don't go too complex... or too simple

Don't make your budget too complex or too simple. When you micro-manage your budget by creating place holders for every zip tie and USB cable, you can easily wind up with a totally inflexible budget. At the same time, don't create a completely generic budget with an overarching line item labelled "Stuff." There's always a balance to be had with the budget. If you use Google Docs, you'll find plenty of spreadsheet templates for budgets here. Regardless of your office suite, you'll find enough templates available to help you get that balance between complex and simple just right. Even if your budget does lean toward the simplistic, you need to add plenty of detail so you know where your money is going.

Don't fret the differences

I have never met anyone who was able to balance a budget to perfection. No matter how much time you've spent with those numbers, there will be differences (either plus or minus). Try not to get bogged down in those differences (unless they are seriously significant). Instead of fretting over them, use them as a learning tool for next year's budget.

Do remember to involve key people

Yes, the IT budget is your baby. But there are resources at your disposal that could go a long way toward helping you craft a spot-on budget that's less likely to fail you. Bring human resources, accounting, sales, and production into an IT budget meeting, and that document you create will better serve you throughout the year. After all, some of those staff members may know their way around numbers a bit better than you.

Do budget for late payments

You have numbers to meet at the end of the month. The biggest issue is that those who owe you money aren't paying on time. Those untimely payments can affect your budget. This is a common issue (especially with smaller businesses), and there seems to be a never-ending number of possible solutions that may or may not work. What's important here, is to budget with this in mind.

Do treat your budget as a work in progress

You should never consider your budget as set in stone. If you do, you'll fail to navigate the waters with the necessary flexibility required to keep from losing your mind and keep you from drowning under an ever-expanding loss column. Being inflexible with your budget means you won't allow for movement of funds and expenditures crucial to keeping your business above water.

Other suggestions?

Talk to the experts. It’s easy to overlook or underestimate IT spending in key areas like support and backups. If you already have a trusted IT supplier or support company, ask for their input. Talk to other small business owners about their IT budgets too. If we can help in anyway, please contact us.


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