A small business IT budget has four lines. What it costs to run and protect your systems month to month. What equipment is aging out and needs replacing. What projects you have decided to do. And a contingency for the thing you did not see coming. Build it by inventorying what you own and when each piece expires, then put those dates on a calendar before you put dollars next to them. Two dates drive most 2027 budgets. Support for Windows Server 2016 ends January 12, 2027, and Windows 10 machines still running on Extended Security Updates get more expensive every year they stay there. The goal is simple: budget for the replacement you can schedule instead of the failure you cannot.
Key Takeaways
- An IT budget has four lines: what it costs to run, what is aging out, what you have decided to build, and what you did not see coming.
- Start with an inventory and an expiration date for every piece of equipment, because you cannot budget for hardware nobody has counted.
- Two dates shape 2027: Windows Server 2016 loses support on January 12, 2027, and Windows 10 Extended Security Updates cost more every year you stay on them.
- Replacing equipment on a schedule you pick is almost always cheaper than replacing it on the schedule a failure picks.
- A three-year roadmap is what keeps year two from turning into a cliff.
Why most small businesses never actually budget for IT
Nobody budgets for a roof. They budget for a leak.
That is how most small businesses handle technology, and I get why. The roof is not interesting. It does not make you money. It sits up there doing its job for fifteen or twenty years, and then one spring you find a stain on a ceiling tile in the conference room. Now you are paying for the roof plus the ceiling plus the carpet plus two days nobody could use the room. You did not plan for the roof. You reacted to the stain.
Here is the difference, and it is the whole argument for doing this work in September instead of next March. A roof does not tell you when it is going to fail. Your technology does. Microsoft publishes the date. Your hardware warranty has a date printed on it. The server that has been humming in the closet since you moved into the building has a date too, whether or not anyone has ever written it down. Almost everything expensive about business technology is knowable in advance. Most small businesses simply never look it up.
The objection I hear at this point is money. We cannot afford to plan for all of that. You are going to spend it either way. The only thing on the table is whether you pick the month or the failure picks it, and the failure always picks a bad one. Payroll morning. The Friday before a holiday. The week your one technical person is finally taking vacation.
What belongs in an IT budget?
Four lines. That is really all of it, whichever of the three ways of handling IT you have landed on.
Run. What it costs to keep everything working and protected month to month. Your provider fee or your internal staff, Microsoft 365 and other licensing, backup, security tooling, internet, phones. This is the predictable part and the one most owners already have a number for. If you want to see how that number gets built, we walked through what managed IT actually costs back in July.
Replace. Equipment that ages out next year. Workstations, laptops, servers, firewalls, switches, wireless access points, and the UPS batteries nobody thinks about until the power blinks.
Build. Projects you have decided to do. A new location. A wireless refresh in the warehouse. A phone system. Or moving a line-of-business application off that closet server and into hosted infrastructure.
Absorb. The contingency line, which gets its own section below, because it is the one everybody leaves out.
A budget with only the first line is not a budget. It is a subscription, plus a running series of surprises you will be calling emergencies by spring.
Which deadlines land on your 2027 budget?
Two Microsoft dates will drive a lot of the hardware spending around here this year, and both have been on the calendar for a while.
The first is Windows Server 2016. Extended support ends on January 12, 2027. The server does not shut off that day, and that is exactly what makes it dangerous. Nothing dramatic happens, so it is easy to do nothing, while every vulnerability discovered after that date stays unpatched on a machine that probably holds your files, your main application, and your domain controller. If you have one, fund the migration in this budget rather than the next one. A server cutover is not a weekend project. You have to find out what depends on it, confirm your applications will even run on a current version, get the software vendor on the phone, schedule the downtime with the people whose work stops, and leave room for the part that does not go the way it should. That planning is free in September. In December it costs overtime.
The second is the Windows 10 tail. Support ended October 14, 2025, and machines that stayed put have been living on Extended Security Updates. Microsoft sells those by the year, starting at $61 per device for Year One, with the price doubling every consecutive year for a maximum of three years. The program is also cumulative, so anyone joining late pays for the years they skipped. That pricing is not an accident. It is designed so that waiting is the worst available option, and for a ten-machine office the second-year bill starts to look uncomfortably close to just buying the computers. ESU also buys you critical and important security patches and nothing else. There is no technical support attached, and nothing gets fixed that is merely broken rather than exploitable.
One more that is not a Microsoft date. Check when your cyber insurance renews. The applications crossing our clients’ desks now ask whether multi-factor authentication, endpoint detection and response, and tested backups are actually in place, not whether you intend to get to them. If yours are not, that work belongs in next year’s numbers instead of in a scramble three weeks before the policy is up.
How do you know what to replace and when?
You cannot budget for equipment nobody has counted, so the first hour of this is not spreadsheet work. It is a walk-around.
Write down every server, workstation, laptop, firewall, switch, access point, and network appliance. For each one, note three things: roughly when it was bought, when the warranty ends, and what stops working if it dies. That third column is the one people skip, and it is the one that matters. It is the difference between the reception desk PC and the box the whole clinic schedules patients on.
Then put a replacement year next to each. Rough rules that hold up well enough for budgeting: workstations and laptops somewhere in the three to five year range, servers five to seven, and network gear like firewalls and switches when the manufacturer stops shipping firmware updates for them rather than when they stop passing traffic. That last one surprises people. A switch can work perfectly and still be a security problem.
There is a pattern worth catching while everything is in front of you. Most small offices bought all their computers at the same time, which means they all age out at the same time. That is a reasonable way to run a business and a miserable way to run a budget. Stagger it. Replace a third of the fleet each year and the line item stops being a cliff and starts being a number.
And while you are looking at all of it, look at the backups. When we run our first audit with a new client, the single most common thing we find is that there is no properly recoverable backup. The job appears to run fine every night. Nobody has ever restored from it, and it would have failed on the day that mattered. Much better to learn that in September when it is a budget item than in February when it is a disaster.
What about the money you cannot predict?
Put a real number on the contingency line, then defend it when someone tries to trim it.
I am not going to hand you a tidy industry percentage, because anyone who gives you one is guessing at your business. What I will say is that the line has to exist, and it has to be big enough that a dead server or an incident response does not become a board conversation. If you have no idea what to put there, go look at what your unplanned technology spending actually was over the last three years. That number is your starting point, and it is usually higher than people expect, because emergency spending never arrives labeled as IT. It shows up as an invoice from whoever you called at seven in the morning.
One honest note. Planning and funding this properly lowers your risk considerably. It does not remove it. There is no spending level that makes a business un-hackable, and anybody telling you otherwise is selling something. What a good budget buys you is fewer surprises and a much shorter bad day when one does land.
How do you turn a budget into a roadmap?
A budget covers a year. A roadmap covers three, and it is the thing that keeps year two from being a cliff.
You do not replace an entire roof in one weekend, and you do not modernize an entire environment in one fiscal year either. Take your replacement list and your project list, sort them by what has a real deadline attached versus what is merely old, and spread them across three columns. Next year gets the items with dates on them, and the Server 2016 migration is the obvious one. Year two gets the work that only makes sense once year one is done. Year three is a placeholder you will rewrite, and that is fine. Nobody expects year three to be right. What you want is that when something lands on your desk in March, you have somewhere to put it besides “this year” or “never.”
A timing note for calendar-year businesses: if you are weighing a hardware purchase before December 31 for tax reasons, the rule generally turns on when the equipment is actually in service, not when you signed the order. Talk to your accountant early, because hardware lead times are your problem to manage, not theirs.
Schools and districts run on a different clock entirely. Your fiscal year and your E-Rate filing window drive the schedule instead, and the summer build season is the real constraint. We laid that out in the northwest Iowa K-12 guide.
Where ANP fits
Advanced Network Professionals has been doing this out of Spencer since 2017, and sitting down with an owner to build a number they can defend is a good share of what our technology consulting work actually looks like. We are a local team of 17, Microsoft and Fortinet certified, working with businesses, clinics, districts, and city offices across northwest Iowa and the Iowa Great Lakes.
Every engagement starts with an audit, which in practice is the walk-around described above done properly and written down: what you own, what depends on it, when it expires, and what replacing it costs. You end up with a document you can hand to whoever signs the checks. From there, our managed IT services cover the run line with 24x7x365 support behind it, and we handle the replacement side too, including responsible recycling of the machines that come out. If a server migration is sitting on your 2027 list, that conversation goes a lot better in September than it does in December.
Frequently Asked Questions
How much should a small business budget for IT?
There is no percentage that fits every business, and any number quoted without seeing your environment is a guess. What drives it is how many people and devices you have, how old your equipment is, what you are required to comply with, and how much downtime would genuinely cost you. Build it from the bottom up using the four lines above rather than from a percentage found online.
What is a technology roadmap, and do I actually need one?
A roadmap is just your replacement and project lists spread across three years in a sensible order. You need one the moment your equipment stops aging out evenly, which for most businesses is right after the first batch they bought all at once. Without it, every third year turns into an unaffordable year.
Should we replace our Windows 10 computers or buy Extended Security Updates?
It depends on how many machines you have and how long you need them. Think of ESU as a bridge you are paying rent on, at a rent that doubles annually. It makes sense for a small number of machines you already have a dated plan to replace. If you are looking at a whole office, run both numbers before you renew. Buying the hardware often wins sooner than people expect.
When should we start planning next year’s IT budget?
Now, if you run on a calendar year. September and October give you time to inventory what you have, get real quotes, and sequence the work before the numbers are locked. Starting in December means you are pricing whatever is in stock.
Put a number on it before the year picks one for you
You do not need a full assessment to get started, and you do not have to commit to anything to get a straight answer. If you want help turning a walk-around into a budget you can actually defend, request a quote or contact ANP, and we will start with what you actually have today.