As the owner of a small business, I know there is never enough money to pay for the staff, the office, factory or warehouse, the vehicles, the advisors and the IT systems we wish we had. We always settle for a little less than we wanted to ensure the business remains afloat.
Certainly over the last few years, in many cases it has been the businesses that can manage a budget as margins are compressed that have prevailed.
So when it comes to spending on essential systems for a business, it is important to get the priorities right to ensure we protect cashflow in the short term, but deliver the systems the business needs to support the growth for the long-term objectives.
Sign up for SmartCompany newsletter.
Free to your inbox every weekday
So often we see businesses flying along and showing signs of rapid growth followed by decline and closure. This is often because they failed to implement the systems in time to support the organisation they became, and by the time the blow out was noticed, it was too late to recover and become a stable smaller business again.
The key to successful growth is having a great team, good leadership and management with clear vision and objectives backed up by systems that are scalable, supported by IT systems and applications that help keep it all productive and measureable.
So knowing what to do next is the challenge growth companies face. The key is to understand the key metrics in your business and to know where the money comes into the business and where it goes out. If it is going out of the business in a non-revenue generating area, you need to be sure it is a benefit to the business in other ways. Recently raised concerns about an untracked return-on-investment with social media campaigns is an example of this unmanaged expenditure.
The solution lies in measurement systems. This is driven by software.
Probably the first system people will turn to these days is an email system, whether it is in the cloud or on a server, shared calendars and contacts with centralised email will improve efficiency, and if set up well, will drive mobility.
This can be extended with a CRM system that helps track future sales and client interactions. However, before the CRM goes in, there will probably be a financial system put in again by trusty old MYOB or the newer cloud alternatives such as SAASU or Xero. Maybe, as the business grows, there is an industry specific solution or a custom solution that needs to be considered.
The next level of complexity to improve internal communication and efficiency might be an intranet that centralises policy documents, company IP and other documents for sharing. When that needs more control to stop version control issues with documents saved in multiple locations, a document management system may be required.
Of course, if you are in manufacturing, an enterprise resource planning (ERP) system may be required or an inventory management system might hit the spot. I guess the message here is that there are lots of systems that lead to better cost control, better productivity and better business profitability.
I have always looked at what larger businesses are doing to get an understanding of what my business or my client will require as it grows. Being surprised by an unidentified need when a cost blows out is not good business; doing some research in your own industry and planning ahead is certainly a smarter practice.
If you have not updated your systems or implemented good systems in your business yet, chances are you are wasting more than you are saving. Yet my observation is that Australians are not seeking technology at the moment; in fact, they are keen to avoid it and hope the cost issue will go away.
Business costs will always be there. The key to what to do next is do whatever will reduce your total cost of doing business the fastest. If you do not know what that is, spend a little money to find out what you don’t yet know – it might just save you a fortune.
David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth.