IT Budget Planning for Small Business: What to Spend and Where

IT budgeting in a small business usually goes one of two ways. Either there's no budget at all — things get bought when they break, and the total spend is a mystery until the accountant asks about it at year-end. Or there's a budget that's either too small (cover the subscriptions, cross fingers on everything else) or too large (enterprise tools for a 10-person team).

Neither approach works well. Here's a framework for thinking about IT spend that matches reality for a business with 5–30 staff.

The Categories

IT spend for a small business breaks down into four categories:

1. Core platform (the foundation)

This is your productivity suite — Microsoft 365 or Google Workspace. For Microsoft 365 Business Premium (which includes security and device management), expect to pay around £16–£20 per user per month. For a 15-person team, that's roughly £250–£300 per month.

This covers email, file storage, Office apps, Teams, Intune, Defender, and Conditional Access. It's the best value proposition in small business IT — one licence covering productivity, security, and device management.

2. Managed IT support

Your external IT support provider — helpdesk, device management, user admin, monitoring, onboarding, security management. Budget for £30–£60 per user per month for quality managed support in London. For a 15-person team, that's £450–£900 per month.

This replaces the hidden cost of the office manager spending hours on IT, the productivity lost to slow issue resolution, and the security gaps that come from nobody actively managing your environment.

3. Hardware

Laptops last 3–4 years in a business environment. A good business laptop (Dell, HP, Lenovo) costs £600–£1,000. For a 15-person team replacing machines on a rolling cycle, budget for 4–5 replacements per year — roughly £3,000–£5,000 annually.

Don't forget peripherals: monitors for anyone who needs one, keyboards, mice, headsets for video calls. Budget £100–£200 per person for a comfortable setup.

4. Line-of-business applications

CRM, accounting software, project management, industry-specific tools. These vary hugely by business. List every subscription, what it costs, who uses it, and whether it's still needed. Most businesses have at least one tool they're paying for that nobody uses.

What to Cut

The most common areas of overspend in small businesses:

• Unused licences: Seats assigned to people who've left, or trial subscriptions that converted to paid without anyone noticing.
• Duplicate tools: Two project management platforms, three file-sharing services, multiple video conferencing tools. Pick one of each and commit.
• Over-specced hardware: A £2,000 laptop for someone who uses email and Word. Match the hardware to the job.
• Unnecessary add-ons: Extended warranties that duplicate your managed support coverage. Premium tiers of software when the basic tier does everything you need.

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What Not to Cut

• Security: MFA, device management, email protection, and backup. The cost of not having these is orders of magnitude higher than the cost of having them.
• Managed support: The "we'll just call someone when something breaks" approach costs more in downtime, lost productivity, and emergency callout fees than a monthly managed support plan.
• Backup: A few pounds per user per month. Not having it is gambling with your business data.

A Realistic Total

For a 15-person business in London, a reasonable annual IT budget looks roughly like this:

• Microsoft 365 Business Premium: £3,600–£4,500/year
• Managed IT support: £5,400–£10,800/year
• Hardware replacement: £3,000–£5,000/year
• Backup: £500–£1,000/year
• Line-of-business software: varies

That's roughly £12,500–£21,000 per year before line-of-business software — or about £70–£120 per person per month for the core IT stack. Compare that to the cost of a single full-time IT hire (minimum £35,000–£45,000 salary plus NI, pension, equipment, and training) and managed support is clearly the more efficient model for a team this size. See our breakdown of how much IT support should cost for more detail on what's included.