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From
health insurance to heating and cooling bills, the cost of doing business is
moving in one direction: up. This puts many small-business owners in a
pinch, squeezed by limited financial resources on one side and the pressure
to keep prices low on the other.
To
survive and thrive, it's essential to keep your costs down as much possible.
Here's how.
Find
a Trusted IT Advisor
When buying a home, a good realtor can save you thousands. A savvy CPA can
help cut your taxes. Likewise, a trusted IT advisor can save you money on
your technology purchases.
A
trusted IT advisor can be a good friend, family member or associate with
in-depth technology knowledge. He or she could be a technology reseller. Or
perhaps you have someone on staff who handles your IT needs.
The
point is this: Find someone you trust who's particularly savvy about
technology. Then ask detailed questions.
What
particular technology and/or product do they recommend to solve a particular
business problem you have? What has been their experience with the
technology? What are the pros and cons? How might the technology fit into
your business's long-term IT strategy? How does it map to your business's
goals? What kind of return on investment can you expect, both short-term and
long-term?
This
kind of information, coming from someone who understands your business, will
help you find the right technology for your needs, helping prevent you from
wasting money on the wrong technology or from spending more than necessary.
It also helps ensure the tech investments you make today will still serve
your needs tomorrow.
Don't
have a trusted IT advisor? Find out if there are user groups in your area
and attend a meeting. You may find someone knowledgeable who can help. Visit
the technology manufacturer's website for a list of value-added resellers or
other resources. Some manufacturers maintain online forums for their users
to exchange questions and ideas. Another option: Consider hiring an IT
consultant. Whenever possible, get advice from someone knowledgeable before
you spend your hard-earned money.
Buy
Based on Value, Not Just Price
Never buy technology solely on price. Instead, look for value, which comes
from a product's overall quality and usefulness in relation to its purchase
price.
For
example, the lure of a network switch for $99 can be quite compelling. But a
low-cost switch may be unable to support your network's future growth. When
the time comes, you'll have to toss out the switch and invest in more
powerful equipment--and that's a waste of money. You're better off investing
in a foundation that supports future growth, rather than investing in cheap,
short-term solutions.
In
addition to value, it's important to calculate a technology's total cost of
ownership (
TCO
). Purchase price is only one item in the
TCO
, and it can be one of the smallest costs. In addition to purchase price,
TCO
usually includes costs for the system design (such as the design of a
small-business network); installation; administration and management;
training; service and support; the costs of related equipment (such as
network cabling) and consumables (such as inkjet cartridges, if you're
buying a color inkjet printer); and the costs to upgrade features, increase
performance or to add capacity later in order to address projected business
growth.
Determining
TCO
can be a challenge. Here again, a trusted IT advisor can shed light on the
total costs of implementing a particular technology.
Carefully
Weigh Your Financing Options
As I mentioned earlier, some small businesses buy a technology product on
price alone, which is often a mistake. But the reverse--not buying a
technology simply because of its price--can be just as counter-productive.
Many
of today's sophisticated technologies may seem expensive but can actually
save your small business money in the long run. Internet Protocol (IP)
communications systems are a great example. An IP communications solution
can drastically reduce your business's long-distance and other
communications costs. You can save approximately $12,000 annually in
long-distance costs and $15,000 in telephone administration costs, thanks to
IP communications.
How
does a cash-strapped small business acquire technology that might seem out
of reach? One option is leasing. Leasing agreements often enable you to pay
nothing up front. And you'll have a predictable monthly line-item expense,
which helps budget more effectively. Read more about leasing's benefits by
reading this article on the pros and cons of leasing tech equipment.
Another
option is to outsource. Some technology solutions, such as IP communications
and network security, can be handled by what's called a managed service
provider. The service provider will design, implement and maintain the
technology solution for you. The service provider either hosts the equipment
on their premises or supports and maintains the equipment at your site. As
with leasing, this arrangement often allows you to conserve cash and
provides a predictable line-item expense. And it ensures your technology is
up to date and secure for the long term.
A
Few More Tips...
·
Make a realistic budget and stick to it. With a budget,
you're less likely to spend more than you need to--or more than you have.
·
Consolidate purchases. Sometimes you can get a deal
from the vendor or reseller by combining multiple purchases in one
transaction.
·
Try before you buy. Whenever possible, test the
equipment you plan to acquire before buying. Make sure it meets your
expectations and works well in your business's computing infrastructure.
This will help prevent you from spending money on equipment that doesn't
meet your needs. Also, ensuring equipment works well in your environment
before you buy helps reduce time spent on technology support issues later.
And for any business, large or small, saving time is saving money.
The
Bottom Line
Before you spend any money on new technology, do your research. Ask others
about their experiences using the technology you have in mind. Make sure the
technology will serve you in the short- and long-term. And above all, never
buy on impulse. You've worked too hard to waste your money on a bad
technology investment. Instead, make that investment work hard for you.
Peter
Alexander is Entrepreneur.com's "Tech Trends" columnist and vice
president of worldwide commercial marketing at Cisco Systems Inc., the
leading supplier of networking equipment and network management for the
internet.
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