IT Budgeting for Australian Small Businesses: A Practical Guide

Introduction

Technology spending can feel unpredictable for small businesses. One month it’s a new laptop, the next it’s software subscriptions, then suddenly the server needs replacing. Without a budget and plan, IT costs creep up while the value delivered remains unclear.

A simple IT budget helps you plan for expenses, avoid surprises, and ensure technology investment supports your business goals.

Why IT Budgeting Matters

Avoid Surprises

Unplanned IT expenses disrupt cash flow:

• Emergency equipment replacement
• Unexpected software renewals
• Security incident costs
• Support call-outs

Budgeting helps you anticipate and plan for these expenses.

Make Better Decisions

With visibility into IT spending:

• Compare costs to alternatives
• Evaluate value for money
• Prioritise improvements
• Justify investments

Support Business Goals

Align technology with business priorities:

• Growth requirements
• Efficiency improvements
• Customer experience
• Competitive positioning

Common IT Expenses

Hardware

Computers and Devices

• Desktop computers: $800-2,000
• Laptops: $1,000-2,500
• Tablets: $400-1,200
• Monitors: $200-600

Plan for replacement every 4-5 years.

Network Equipment

• Router/modem: $100-400
• Switches: $100-500
• Wireless access points: $150-400
• Cabling: Variable

Replacement typically 5-7 years.

Peripherals

• Printers: $200-1,000
• Scanners: $200-500
• Headsets: $50-200
• Webcams: $50-200

Servers (if applicable)

• Small business servers: $2,000-10,000
• Replacement every 5-7 years
• Consider cloud alternatives

Software

Operating Systems and Productivity

• Microsoft 365: $15-35/user/month
• Google Workspace: $9-25/user/month
• One-time licenses: Decreasing

Business Applications

• Accounting (Xero, MYOB): $25-65/month
• CRM systems: $25-150/user/month
• Industry-specific software: Varies widely

Security Software

• Antivirus/endpoint protection: $5-15/device/month
• Backup solutions: $10-50/month
• Password managers: $4-8/user/month

Services

Internet and Connectivity

• Business internet: $70-200/month
• Mobile data: $30-80/user/month
• Fixed phone: $30-80/month

Support and Maintenance

• IT support (MSP): $50-150/user/month
• Break-fix support: $100-200/hour
• On-site visits: $150-250/visit

Cloud Services

• Cloud hosting: $50-500/month
• Email hosting (often included in M365/Workspace)
• File storage: Often included

One-Off Projects

• New system implementations
• Office moves or setup
• Security improvements
• Website updates

Building Your Budget

Step 1: Inventory Current Spending

List everything you’re paying for:

Monthly/Regular

• Software subscriptions
• Internet and phone
• Support contracts
• Cloud services

Annual

• Software renewals
• Hardware maintenance
• Domain and hosting

Ad-hoc

• Equipment purchases
• Support calls
• Project work

Step 2: Identify Upcoming Needs

Look ahead:

Equipment Lifecycle

• What’s due for replacement?
• What’s becoming unreliable?
• What can wait?

Business Changes

• Growing team (new equipment/licenses)
• New locations
• Changed requirements

Improvements Needed

• Security gaps
• Efficiency opportunities
• Customer experience

Step 3: Set Priorities

You can’t do everything. Prioritise:

Essential

• Keep business running
• Meet compliance requirements
• Address security risks

Important

• Efficiency improvements
• Quality of life
• Competitive capability

Nice to Have

• Latest equipment
• Advanced features
• Future preparation

Step 4: Create the Budget

Format Options

Simple spreadsheet:

• Category
• Monthly cost
• Annual cost
• Notes

Include

• Current ongoing costs
• Planned purchases
• Contingency (10-20% for unexpected)

Review

• Monthly: Actual vs budget
• Quarterly: Adjust as needed
• Annual: Full replanning

Budget Tips

Smooth Out Spending

Instead of big annual purchases:

• Stagger equipment replacement
• Monthly subscription models
• Managed service agreements
• Lease instead of buy

Plan for Hidden Costs

Software often has hidden extras:

• Implementation and setup
• Training
• Integration
• Add-on features

Include these in project budgets.

Consider Total Cost

The cheapest option isn’t always best value:

• Cheap equipment may need replacing sooner
• Free software may lack critical features
• Low-cost support may be unavailable when needed

Evaluate total cost over time.

Right-Size Your Technology

Don’t overspend on capability you don’t need:

• Business laptop vs gaming laptop
• Professional vs enterprise software
• Simple vs comprehensive solutions

Match technology to actual requirements.

Common Budgeting Mistakes

No Contingency

Everything works until it doesn’t:

• Hard drives fail
• Equipment gets stolen
• Urgent security patches needed

Budget 10-20% contingency for unexpected expenses.

Ignoring Renewals

Subscriptions and licenses renew:

• Track renewal dates
• Budget for increases
• Review before auto-renewal

Underestimating Projects

Projects typically cost more than expected:

• Scope creep
• Unexpected complications
• Training and transition

Add buffer to project estimates.

Set and Forget

Technology changes, so should budgets:

• New tools become available
• Prices change
• Business needs evolve

Review and adjust regularly.

Getting Help

When to Get Professional Input

Consider IT professional help for:

• Initial budget setup
• Major purchase decisions
• Efficiency review
• Security assessment

Questions to Ask Your IT Provider

• What should we budget for ongoing costs?
• What equipment needs replacing soon?
• What are we paying for that we don’t need?
• What are we missing that we should have?

Benchmarking

Typical small business IT spending:

• 3-6% of revenue for most businesses
• Higher for technology-dependent businesses
• Lower doesn’t mean better (may indicate underinvestment)

Compare to industry peers if possible.

Sample Budget Categories

For a 10-Person Business

Monthly Ongoing

• Microsoft 365 Business: $250
• Accounting software: $60
• Internet: $120
• IT support (basic): $500
• Security software: $100
• Backup: $50
• Phone system: $150

Total Monthly: ~$1,230

Annual Allowances

• Equipment replacement: $3,000
• Software projects: $2,000
• Contingency: $2,000

Total Annual: ~$22,000

This is illustrative—actual costs vary significantly.

Conclusion

IT budgeting doesn’t need to be complicated. Start with visibility into current spending, plan for known upcoming needs, and set aside contingency for surprises.

Review regularly, adjust as circumstances change, and don’t hesitate to get professional input on major decisions.

A good IT budget helps you get value from technology spending while avoiding the stress of unexpected expenses. That’s worth the effort to put one together.