I was looking for a book recently and called my usual bookstore, who is well-known in T&T. They were able to check if the book was available and if any of the other branches had it, which they didn’t. I really wanted the book so I called another well-known bookstore and inquired the same, to which they replied that they had none at the branch. When I asked if they had it at any of the other branches, the reply was, “Well you can call them to find out.”
Now the reply was pleasant and not at all discourteous, but did you really expect me to call around to find out if they had the book? I do try to shop locally and support the local business community, but the world has gone global and businesses should make it easy for their customers to do business with them.
Why was one bookstore able to tell me definitively if they had the book anywhere, nationwide, but the other couldn’t? It’s simple, they had a point-of-sale system that allowed them to do that.
The SME Advantage
Many small to medium businesses (or SMEs) have not taken advantage of the Information Technology advances that exists, for reasons such as cost, lack of expertise, or they are simply ignorant of what is out there. That’s a shame because the small business is in a better position to exploit the advantages of the new technologies than larger businesses.
The advantages that an SME has over a large business:
- They can make decisions faster, and adapt quicker to changes and new technologies.
- The adoption of new technologies is easier because of the smaller workforce and closer involvement of team members.
- Success is crucial resulting in the business owner taking ownership of project outcomes rather than delegating it to others who may have lesser interest.
IT can allow SMEs to run faster, run cheaper, and run stronger, but these businesses need to move away from viewing only the capital investment required and think about the long-term returns.
Some ways that IT can help small businesses:
- Manage your accounting such as expenses, revenues, assets, payroll and cash flow. Using reporting and analysis, you can get better insights from financial data beyond the “bottom-line”.
- Track service provision to customers including warranties and performance. Track the time taken to perform service jobs, and the performance of individuals performing those jobs. You can increase your customer satisfaction, customer loyalty and renewals by taking a proactive approach to servicing.
- Manage and track inventory so that you can determine how much inventory is costing you, the turnaround of items so that you can order only the best performing ones, and even the locations where items may have higher demands so you can allocate your inventory accordingly.
- Measure the productivity of your operations by using metrics such as time to complete individual processes, the costs of those processes and how much resources it takes. You can use this data to then make business decisions as to whether processes can be improved or even eliminated to improve the business’ overall productivity.
- Improve collaboration within the business, with vendors, and your customers.
- Manage your employee information such as time and attendance, vacations, and their job objectives and work performance.
Will these cost money to acquire and implement? Yes, it will, but what is the cost of not implementing it?
The Opportunity Cost
Let’s say to purchase and setup a small business accounting software might cost around $500. However, the productivity gains you made by getting information quickly to pay taxes and knowing and following up with your account receivables saved you $1,000 over three years, plus the insight gained into you best performing services or items improved your profitability by another $1,000.
By not implementing the software, you’ve lost $1,500 over the three years.
This is what economists call the opportunity cost – the cost of an alternative that must be forgone in order to pursue a certain action.
In the long-run, you can be better off by implementing new IT systems to automate your work processes. It may be hard to put out that initial $500, but you’d have turned that investment into $2000; a 300% return on your investment over three years. What other investment is giving you such returns?
This is why I say that businesses should be thinking about the long-term returns rather than that initial capital cost.
Making the Choice to Invest in IT
All of this is not to say that you should run off and implement everything under the sun. What you should do is to first understand where your business is now, then determine where where you would like it to be and start figuring out how ways that IT can get you there.
That last step is not easy for everyone (and not as simple as I’ve put it), but it can and has been done.
So are you ready to invest in growing your business?
