Creating an IT budget helps ensure that your business can scale with technology — without spending excessively.

Unfortunately, many companies are making simple mistakes when they create their IT budgets. Here’s how you can avoid some of those same IT budgeting mistakes and in the process, build a more useful budget.

Not Setting Aside Enough Money for Upgrades

Somewhat surprisingly, small and medium-sized companies spend more of their revenues on IT than large companies do. According to research from CIO, small companies spend 6.9% of their revenues on IT. Larger companies, however, spend about 3.2%.

As a small business, your company needs to keep up with the latest advances in technology so you can realistically compete with larger organizations. Otherwise, you could find it difficult to match the services your competitors offer. Because of this, make sure to include technology upgrades in your IT budget.

Not Investing Enough in Training & Education

IT isn’t just about purchasing the right hardware and software. You also need employees or partners who have experience working with information technology.

However, hiring or partnering with someone who has experience simply isn’t enough. You also need people who are able to keep your company up-to-date with the latest technology advancements. If you don’t, you could find yourself sweeping with a broom, while your competition is over there using a Roomba.

In the world of technology, disruptions happen frequently. If you don’t set aside part of your budget to train and educate your IT staff, then your business will suffer as a result.

Relying on the Same Budget Every Year

A lot of businesses assume their IT budget will remain fairly constant from year to year. As a result, they reuse the same IT budget over and over again.

In reality, your IT budget can change dramatically from one year to the next. It’s one of the most common IT budgeting mistakes.

For example, if you purchase new computers for your staff in 2017, then you don’t need to purchase new computers in the following years In this case, it doesn’t make sense to include this particular item in your budget — especially since today’s computers have life cycles that can last up to 5 years.

In other instances, you may need to increase your IT budget.

For example, if you plan to move more of your applications and data storage to the cloud, then you need to adjust your IT budget to acknowledge that. Even if the amount of money you spend overall doesn’t change, your budget (and everyone who views your budget) still needs to reflect how you intend to spend money throughout the year.

Whether your budget increases, decreases, or remains the same, you should always review it each year to make sure you’re prepared for upcoming changes.

Final thoughts

Not establishing an IT budget is one of the biggest mistakes you can make. Without a budget, you don’t know how much you can afford on crucial expenses like training and upgrades. Avoid the three mistakes listed above, so your budget will be prepared to face the coming year.