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What’s in your IT budget?  Small business checklist 

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IT budgets are often reactive, but predictable spending comes from knowing what categories to plan for and how to prioritize them. This guide lays out the core areas every small business should include in their IT budget and the best practices to keep costs under control.

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Think you might be overspending. Check out Spotting Overspending in Your IT Budget: A Guide for Small Businesses in Western Canada.

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Core Budget Categories

1.     Security and Compliance

Typical allocation: 5–15% of IT budget

  • Firewalls, endpoint protection, and backups.
  • Security awareness training.
  • Compliance tools for regulated industries.

2. Infrastructure and Devices

Typical allocation: 30–40% of IT budget

  • Hardware lifecycle planning (laptops, desktops, servers, networking gear).
  • Cloud services and subscriptions (Microsoft 365, collaboration tools).
  • Budgeting for AI-ready devices as older hardware phases out.

Related Reading: Future-Proofing Business Devices for AI Tools Like Copilot

3. Support and Staffing

Typical allocation: 20–30% of IT budget

  • In-house IT salaries or outsourcing to a managed service provider.
  • Helpdesk access for staff to resolve daily issues.
  • Project support for new implementations.

Related Reading: IT Costs for Small Businesses: In-House vs. Outsourcing in Western Canada

4. Productivity and Collaboration Tools

Typical allocation: 10–15% of IT budget

  • Licenses for communication tools (Teams, Zoom, Slack).
  • Document management and file sharing platforms.
  • Workflow automation and integration tools.

5. Business Continuity and Disaster Recovery

Typical allocation: 5–10% of IT budget

  • Backup and recovery solutions.
  • Testing recovery processes.
  • Cyber insurance requirements tied to resilience.

Best Practices for IT Budgeting

  • Update annually: Use last year’s numbers only as a reference, not the full plan.
  • Plan for refresh cycles: Replace hardware every 3 – 5 years instead of waiting for breakdowns.
  • Look at total cost, not line items: Factor in licensing, maintenance, and support fees.
  • Align IT with business goals: Budget for growth, hiring, or adopting AI.
  • Build in flexibility: Reserve 10 – 15% for unexpected needs.
  • Use fixed-fee support models: Predictable monthly pricing reduces variability compared to hourly billing.

IT Budget Benchmarks in Canada

  • Security spending: Canadian SMBs (10–49 employees) spent $2.6B on cybersecurity in 2023. Most organizations allocate 5–15% of their IT budget to security. (Sources: Statistics Canada, CIRA)
  • Recovery costs: Canadian businesses saw $1.2B in cyber recovery costs in 2023, double the 2021 total. (Statistics Canada)
  • Managed IT services pricing: Canadian providers can be as high as $400+ per user per month for fully managed services.
  • Industry benchmarks: IT spend as a percentage of revenue varies: finance ~4–11%, manufacturing ~1–3%. (Avasant benchmarks)

Predictable IT Spending

Horizon’s TotalCare Managed IT program is priced at $150 per employee per month. It includes unlimited helpdesk tickets, proactive monitoring, and a technology roadmap that keeps your IT spending predictable and aligned with your business goals.