This is not an easy question to answer. I like to start by referring to some research and surveys conducted by the Gartner Group, TechTarget, or other analysts. The most common range they talk about is 4% to 8% of Gross Annual Revenue for small to medium retail or distribution businesses.
I’m not convinced this applies to every business, and there are many variables to consider, but if we use these numbers as a starting point, with annual sales of $250,000, the budget range is between $10,000 and $20,000.
To reiterate, for a business with sales of $1,000,000 annually, that’s between $40,000 and $80,000 for information technology spending every year.
I tend to make more conservative recommendations. In my experience, especially because technology is a moving target, I believe a company should overhaul their I.T. systems every 3 years using those numbers as a guideline, and then spend about half of that amount in years 2 and 3 on maintenance and support. To clarify, with sales of $250,000 that’s $10,000 to $20,000 in year 1 and $5,000 to $10,000 in each of years 2 and 3.
The thing that trips up a lot of business decision makers (especially entrepreneurs, who by nature are incredibly shrewd) is that this can’t be looked at as discretionary spending… in 2014, I.T. is a crucial part of most businesses. What we really need to do is quantify the benefits of that spending– analyze the Return on Investment if you will. We can help you to do just that. To have a deeper conversation about this, give us a call– one of my most important services for our clients is Mentoring. My background in Accounting, Auditing, Business Analysis, and Technology can help provide answers to these questions.
With breakthrough iOS devices and a powerful line-up of Mac notebooks and desktops, you have everything you need to transform your business. We make it easy to manage fleets of these tools efficiently and securely.
We help small to large businesses to streamline their I.T., saving money, saving time, and increasing productivity.
It’s important to keep learning. I recommend ongoing training to all my clients, and I practice what I preach.
I’ll be away on training from February 7th, 2014 to February 12th, 2014. If you need to reach me, email is best. And I apologize in advance, but I’ll only be able to respond in the evening.
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Switching your business to Apple? We can help automate your financial systems. From planning, to training, to network configuration, to “rolling up our sleeves with data-input”, we make it easy.
Our background in business analysis and our knowledge of the Apple eco-system helps deliver systems that give you up to the minute information about the health and efficiency of your business.
I’ll be away on training from July 19th to July 29th. Email is the best way to reach me during this time.