The rate of technological innovation is increasing in almost every industry. Be it as revolutionary as surgery-performing-robots, to marginal improvements like LED lighting that better mimics natural light, business owners are constantly being bombarded with new possible purchases that may or may not have any lasting impact on their bottom line.
Knowing when and where to invest in technology is a delicate balancing act. Too cavalier and you’re bound to make an expensive mistake. Too conservative and you’ll be at a competitive disadvantage. Here are a few ways that you can increase your chances of finding value in every purchase.
1. Focus on your strengths
It may be cliché, but the 80/20 rule is becoming an increasingly robust model to evaluate efficiency in business. To put it simply, 20% of your investments in time and money yield 80% of your revenue.
What investments that 20% signifies varies from business to business. It’s imperative that you know what your 20% is and that any large investment directly impacts it.
What are your best performing products? Who are your highest paying clients and why are they so? These are what work and what you need to focus your resources on.
While it’s tempting to imagine that a new piece of technology can build upon some of the poorer performing areas of your business, it’s almost always easier to improve upon something that already works than trying to turn a drain into a goldmine.
2. Solicit advice from your colleagues and customers
New purchases should fulfil at least one of two functions. Either it should make the lives of your colleagues easier, or make your service better for your customers.
It can be easy to theorise how new pieces of technology fulfil these criteria, but theory is no substitute for actual evidence. So, ask your colleagues if a purchase will benefit them, and survey your customers as to whether the purported benefits of a shiny new object actually has any relevance to them.
If your colleagues and customers cannot understand why a purchase is worthwhile, it may be worth questioning your own reasoning behind it.
Combine this with the 80/20 principle and you can begin to ascertain the benefits of new technology that will actually have any bearing on your business and better understand why a purchase is (or isn’t) worthwhile.
3. Test it
Many purchases that initially seem like a no-brainer end up in disappointment due to unforeseen impracticalities. You never know exactly what you’re getting until its operating in your business.
This is why testing is vital. The key advantage that bigger businesses have over smaller ones is that they have a greater margin for trial and error.
Obvious ways of testing a potential process is through a free trial or through a guaranteed refund scheme. While these can be useful, it can often take longer than a trial period to overcome a learning curve associated with a new piece of equipment, or to have enough data to say whether its benefits outweigh its costs.
This is where leasing can offer a solution. Short-term leases are available on a huge number of innovative products which can allow you to test them out for whatever length of time you require. This not only allows you to test new technology to find out if it can be used to generate an ROI, but it also can give you access to real data to inform any future purchases.
4. Focus on quality, not quantity
A scattergun approach to innovation is a recipe for failure.
Aside from the fact that lower quality products generally need to be replaced faster, too many purchases can muddy your understanding of what is actually doing the work in your business.
Once the basic infrastructure of your business is up and running, it is far more effective to keep things simple, focus on one “new thing” at a time and test until you have found the solution that works best.
Focussing on quality does not necessarily mean going for the most expensive product available, but rather going for what delivers you the best value, regardless of initial cost. This may leverage financial agreements, but if you have found the optimal product then you should maximise your profits over time.
5. Don’t delay decisions longer than necessary
While you need to have done sufficient research and testing on a new product, delaying purchases wastes money. While it’s understandable to put off a blow to cash flow for as long as is possible, every day that you lose efficiency with your current, inadequate equipment is a day that you lose ROI on your future investment.
The moment you spot a significant inefficiency or inadequacy should be the moment that the testing process begins. If you know that improvements can be made to your business with the help of new equipment or technology, we can help you with our asset finance packages and ensure that no money gets wasted.
The end of the year is almost upon us. So now is the perfect time for our IT and Telecoms Finance team to strike a partnership with your business. Together, we can review and revise your technology strategy to ensure that your business operates effectively throughout 2020.