With limited resources and myriad options, gauging the true value of a new technology to your business can often feel like a daunting proposition.
The truth is, however, when broken down to a few essential elements the decision over whether to invest becomes considerably less complicated.
- Consider the current capability of the tech, not its future potential: It’s important to remember that you’ll be implementing this tech in the here and now, not in some yet-undetermined tomorrow in which all the processional stars are perfectly aligned. It’s good to be ahead of the curve, but never so far out beyond current viability that you aren’t getting a real benefit or end up watching your investment supplanted by another, more useful emerging tech. You don’t want to get in on the ground floor with a Betamax with VHS around the corner.
- Determine how many steps and/or resources the tech could be reasonably expected to remove from your process in the near term. Though the nature of the technology and your needs will obviously drive this calculus, it is generally wise to cast a wide net. Begin your analysis at ideation and trace any potential reclaimed time or resources straight through final execution or product ship. Revisit your most recent accounting books and, if available, any future business projections with these savings in mind. This should give you a ballpark idea of the net benefit.
- Include secondary costs such as downtime during implementation or ongoing maintenance: In business – as in life – stasis is hardly the norm. The fact is that your investment will in all likelihood not be a one-and-done expense. Depending on the nature and complexity of the tech as well as your usage, there will be maintenance and upgrade costs that stretch across the entire lifetime of the investment. Some of these will be impossible to foresee, but others can be calculated in the approximate. So, estimate what you can, add a “rainy day” cushion, and include that number in your decision matrix.
- Cost analysis is not a one-way street. Also consider the price of not investing: Not all costs are direct. And while it is no simple task to prove a negative – in this case, that the absence of investment itself carries an invoice – it is important to consider effects more than one degree of separation from your business. So, for example, if you own a factory and choose not to invest in a system that allows you to move raw materials and product around faster and more efficiently than you are saving a present-day outlay but incurring labor, production, and lost business costs out into the future indefinitely. Further, if you pass these savings onto customers in the form of lower prices and better services you can reasonably be expected to do more business. The point is that the whole story requires context. And the greater context and depth you can bring to your own story, the better you will understand the needs and true resources of your business.
- Find the right financing partner: Of course, if it turns out that new tech will be a boon for your business you still have to come up with the initial funds to purchase it. Though there are no shortage of small business lenders out there, finding – and securing – the right business loan or business line of credit can often be its own trial. Our best advice? Shop around. Not only for a reasonable business loan rate but also for a lending partner that minimizes the hassle of applying for a loan and gets you your money double quick – so you don’t fritter away time and resources filling out mountains of monotonous paperwork and waiting for disbursement that could be better channeled into building and growing your business. Which is, after all, the purpose behind your passion. (Learn how Idea Financial can help you Charge Your Business Forward here.)
After considering these five factors, you should be much better prepared to decide whether or not to invest in a new technology with confidence. If now is not the time, bookmark this page for later opportunities. If it is a net positive, however, the due diligence you have done now will likely pay dividends deep into a future which we believe is no doubt very bright and full of opportunity.