A couple ways you could do it. I usually tend to recommend tape backups as a good starting point, and working from up or out there. What is it that's confusing you?
A pretty basic HP USB Dat40 drive (40GB per tape) is going to run you around $500 dollars, plus about $40-$60 for tapes, plus whatever backup software you want to use. The software that comes with Windows Server (NT Backup) is crap IMO, so you probably want to add a decent program like Backup Exec 11d (I think 12d is out now), which is going to be around $500. All said and told you're probably in about the $1100 - $1300 range for a good entry level tape backup solution (add about $1000 for an ultrium 2 tape drive which will do 400GB per tape, if you're needing more storage). I like tape backup because it satisfies most common backup requirements in one fell-swoop (like off-site storage). Tape backup is still very much the gold standard, so it's hard to go wrong with it in most small business scenarios. The nice thing with Backup Exec is you can add agents (add-on packs) for specific tasks like backing up live databases, exchange, etc, so BE can scale to your needs pretty well.
There's other options as well, like rotating a couple external hard drives. I'm wiery of doing the hard drive rotation thing simply because I've seen this type of thing implimented several times, and there's always risk of hard drive failure, securing/encrypting the data on the hard drive, etc. Another popular option is off-site backup via. an online provider of some kind. I'm also somewhat wiery of these kinds of solutions, but I have seen the work pretty well in certain cases.
But most importantly, a bit of planning goes a long way - how quickly will you need access to your data? If your server totally blows its lid and all your stuff is on a tape, it could potentially be a couple hours or more until you're able to start getting data off the tapes. For a business of 4-5 people, having your data back up within a couple minutes or seconds probably isn't a big deal. But do keep in mind what you'll have to go through to get your data back up and running.
Lots of options though, but you'd probably want to start at a tape backup and work from there depending on whether you have specific needs.