Computers, software and tech support all cost money. The average computer needs to be replaced every four to six years, while mobile devices like smartphones and tablets should be replaced as often as every two years. If this seems like money that could be better spent elsewhere, taking a look at some of the ways computers and related technology benefit small businesses will probably help you see that it’s almost always money well spent.
Increased Potential for Disruption
With just one computer and a decent internet connection, a single person starting a new business can do more today and have more impact on the world than was ever possible before at a cost of just a few hundred dollars. The internet is replete with success stories of people who have found sunglasses or other items on sale in China at cheap prices and drop-shipped them to customers using eBay or Amazon, undercutting the current competition.
While a race to the bottom in sales prices may not be a recipe for long-term success in itself, it demonstrates the potential for disruption and the potential for anyone to start a new business, if she knows how to enter a market at the right time. About half of Amazon's billions of dollars in annual sales come from third-party sellers.
For anyone with a good idea who doesn't have the money to put it into full production, connecting to a crowdsourcing platform like Kickstarter can help raise the required capital. By March 2019, Kickstarter had funded about 160,000 projects with over $4 billion in financing.
Improved Organization and Efficiency
Today’s computer systems are able to store an unprecedented amount of data while making it quickly accessible. A single 2.1 TB hard drive is large enough to store the information from over five million books. Imagine you need to find an invoice sent sometime last summer. Without a computer, you'd be looking for a piece of paper somewhere in a filing cabinet, or – worse yet – sorting through boxes of papers in a storage room.
With a computer, you can simply scan a hard drive or search your archived emails, and the invoice will be available before you can get a cup of coffee.
More than the hassle of finding a document, however, is the amount of time you'd lose organizing your paper files and the office space that would be dominated by the paperwork generated year after year. If a client moves, goes out of business or gets a new phone number, a single entry in a client management system can update the client’s information for everyone in your company.
Improved Mobility and Communication
With a single laptop, today’s business owner can work just about anywhere at any time, essentially becoming an army of one that can compete with any company in the world. Using cloud storage, which puts data on servers that are accessible over the internet, means that you can access important data like price lists and inventory wherever you happen to be. Cloud storage, with services like Google Drive or Microsoft OneDrive, also gives you the ability to collaborate on documents with others in real time, with any changes made by one member of your team instantly available to everyone else in the team.
While today’s cloud storage options are generally cost-effective, it’s not always the right solution. It’s not necessary to use another company’s cloud storage to make data available to your employees. Keeping data on your own servers and making them available using a virtual private network, or VPN, can give everyone access from anywhere they happen to be while keeping that data secure from hackers or anyone else that shouldn’t have access to it.
Increased Insight and Faster Response Times
Web servers and client relationship management software can flood your business with a wealth of information that would have been unheard of just a few years ago. Free software like Google Analytics can track visitors while they visit your website, letting you see which pages they go to, which offers they click on the most and where they're most likely, or least likely, to make a purchase. Customer Relationship Management, or CRM, software can tell you what your customers are buying based on their geographic location or season.
Not only does this help you to determine pricing, like when to put items on sale or to suggest additional items at checkout, but it also helps to predict changes in order volume and shifts in the market. If your data tells you that September will be a busy month, you can increase orders for raw materials and hire additional employees in preparation. It can also suggest new markets that you can move towards, or abandon, with changes in your customer’s preferences.
Improved Accuracy and Automation
The importance of computer software in business goes far beyond CRM and websites. Depending on what your company does, some software packages will be more important than others. Each, however, has two things in common: They can increase efficiency by reducing the amount of time required to do routine tasks and they're more accurate than humans usually are. Examples include everything from a basic spellcheck system while writing business reports to tabulating and analyzing thousands of pieces of data. A few basic examples of business software used today include:
- Word processing software
- Spreadsheet software
- Presentation software
- Accounting software
- Billing software
- Payroll software
- Database software
- Asset management software
The Benefits of Computers by the Numbers
In 2016, Cox Communications surveyed 200 small businesses to determine how their investment in computers and related technology impacted their effectiveness over the previous three to five years.
Those who were identified as leaders in technology adoption reported a 59 percent improvement in customer perceptions of their companies compared to a 50 percent improvement by companies that only kept pace or lagged behind. Employee satisfaction at tech-leading companies increased by 46 percent compared to 30 percent by those that weren't tech leaders. Company culture improved by 40 percent compared to 24 percent by the other small businesses. Additional benefits found in the survey included a 53 percent increase in efficiency, a 36 percent increase in sales and a 34 percent increase in profits.
Putting Money Where it's Needed Most
Regardless of the size of your business, the more you're able to wisely invest in computers, software and related infrastructure, the more likely you'll be able to gain an edge over your competitors who don't have such a budget.
Gartner recommends that most businesses should budget 3.5 percent of their annual revenue to information technology. In fact, most businesses spend between 2 and 5 percent of their revenue on IT, and all indications are that the more you spend, the better your company will perform in the long run. It's not usually a good idea to restrict yourself to a specific percentage every year. If you require a full overhaul of your current computers, you may need to spend more, while in other years, you may be able to spend less.
Needless to say, just throwing money into more expensive systems won't necessarily give you that edge. A business-to-business manufacturing company will have different needs than an online retail store. The former would likely be better off investing in asset management software, while the latter may need to invest in a CRM system.
A published author, David Weedmark has advised businesses on technology, media and marketing for more than 20 years and used to teach computer science at Algonquin College. He is currently the owner of Mad Hat Labs, a web design and media consultancy business. David has written hundreds of articles for newspapers, magazines and websites including American Express, Samsung, Re/Max and the New York Times' About.com.