Techology for Tough Times

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In an economic crisis, cutting costs tops the list of most every business. But can spending money on technology help your small business survive the tough times ahead? We asked professional advisers and got some surprising, and occasionally contradictory, responses. The short answer: yes, but.

Yes, but you don’t have to spend much to see results. Yes, but sometimes spending less than you normally would, or nothing at all, makes more sense. Yes, but making better use of the technology you already have can help as much or more.

What new technology does it make sense for small businesses to acquire, even when money is tight?

Free or nearly free technology, for sure, said Andy Woyzbun, lead analyst at Info-Tech Research Group Inc., a research and consulting firm that specializes in small-medium enterprises.

Various vendors offer online backup, collaboration and productivity tools for free or a nominal amount. If you have a need, it’s time to take advantage. Here are a few examples:

GoogleApps: messaging, collaboration – free-$50/person/year
Hewlett-Packard Upline: online backup, document sharing – free-$60/person/year
Microsoft Office Live: online storage, document sharing – free beta service
Zoho: productivity apps – free for one or a few people

Perhaps more importantly, Woyzbun said, many small businesses have not, for whatever reason, invested in basic business software. He cited three key areas: labor management, customer relationship management (CRM) and accounting.

Small businesses should act now to protect themselves in a tough economy, Woyzbun said, and he pointed out that it doesn’t have to cost a lot or require a huge implementation effort.

“Small businesses can get into the swing of things without the historical pain of implementing an [enterprise resource planning (ERP) system]. You can achieve the same business value for relatively little effort,” he said.

Smarter Scheduling

Labor is a huge cost component for many small businesses, yet most don’t use readily available time-and-attendance products that could give them a clearer view of how they’re spending their labor dollars, help them use resources more efficiently and reduce costs and absenteeism.

Small firms don’t need sophisticated enterprise-grade systems that tightly integrate with payroll and time clocks, Woyzbun noted, just simple software that offers basic scheduling and, most importantly, reporting functions.

Several, such as Attendance on Demand, are Web-hosted or software-as-a-service (SaaS) offerings, which means no capital or IT management costs, and minimal implementation hassles.

CRM may have made deeper inroads among small businesses than time-and-attendance, mainly because of high-profile SaaS products such as SalesForce.com. But lots of small firms still don’t have a CRM capability, Woyzbun said. And it’s more important now than ever.

As well as helping manage the sales function and make it more efficient, CRM can help answer critical questions about which customers are buying which products and how much they’re spending.

“If a customer wants you to increase their credit line – which is fairly common and even more common in this kind of economy – you want a little history on that customer,” Woyzbun said. “If you only have two customers altogether, maybe it’s not so important. But if you have 50 or 60, you have to be making decisions based on real information.”

Again, implementing CRM need not break the bank. Companies such as SalesForce.com and Microsoft with Microsoft Dynamics CRM offer SaaS options that keep cost of entry low. The aforementioned Zoho has an online CRM product that is free for up to three people.

Money Matters

Woyzbun’s suggestion that small businesses need to implement accounting systems came as a surprise. Haven’t most long since done that?

With excellent and inexpensive small-business accounting packages available, such as QuickBooks from Intuit and Simply Accounting from Sage Software, it’s a wonder they haven’t. But Woyzbun said too many still use spreadsheets and manual methods. And today it’s more important than ever to have a good handle on your finances.

“When times are tough, you want to be smart,” Woyzbun said. “How can you make smart business decisions if you don’t have an [up-to-the-minute] view of your business situation?”

Basic reporting from an accounting system can give early warning of any deteriorating aspect of your financial situation – and the chance to react to it. Customers stretching out their payables is just one example.

Most small business owners will want to keep this critical function on their own computers or servers (although there are now SaaS options such as QuickBooks Online). Prices start as low as $50 for Simply Accounting First Step.

Small-business accounting products are easy enough to set up and learn that you don’t need to hire a consultant to help you, Woyzbun said.

Vic Berger, a technologist at CDW, a computer and network equipment reseller and small business systems integrator, argued that buying software – in good times or bad – will almost always save you money.

“There’s a cost trade-off – you’re paying out money to buy the software,” Berger concedes. “But there has traditionally always been a good pay-off with software investments.”

This article was first published on SmallBusinessComputing.com.