Understanding When To Integrate Technology into Your Bootstrapped Startup
Startup CEOs have to make hundreds of decisions every single day to properly manage their small companies and help them gain traction and get off the ground. Some of these decisions are small. However, some can be quite significant. Big investments into new technology may be one decision that many entrepreneurs have to make several different times over the course of their careers.
There are many ways technology can benefit a company. However, sometimes making such investments is a mistake that allocates important resources without much return on the large investment. You have to be smart about it. With that in mind, here are some tips for understanding when it’s the right time to make an investment to integrate new tech into your business.
Keep a Tab on Macro Market Trends
One pitfall for many startups is making large investments much too early. Especially, if it’s into technology that fails to last for the long term.
You may remember Betamax videos or HD-DVD, home video formats that did not last the test of time and were wiped out by their competitors, VHS and Blu-ray, respectively.
Companies that plan to be around for awhile need to plan for the long term. Tech that may seem fashionable one year may be obsolete only months later.
This is especially true for small businesses. An upstart vape shop, for example, might topple before it gained any traction if it put too much money into an atomizer that appeared to be the next big thing, but turned out to be a flop.
While it can be hard to predict what tech will stand the test of time, you can get a better handle of the situation by studying macro economic trends that affect large swaths of the public.
Smartphones and mobile devices, for example, are one example of a kind of tech that is here to stay. Proving so is quite easy as well. 90 percent of the American public now owns a smartphone. The statistics released also suggest extreme growth trends of near 50 percent since 2010.
With all that data in mind, the trend is clear and extremely substantial. As such, investing in apps and other mobile related campaigns is likely to pay off since most consumers are using smartphones regardless.
Do the Math
However, just because the market trends seem favorable to the technology in question, it does not mean investing in that kind of tech is the right course to take.
Instead, you need to be very deliberative about the decision. This requires determining exactly how much the investment is going to cost and whether you have the extra funds in reserve to make the investment.
51 percent of companies plan to invest into big data analytics. This decision was only reached after extensive research by those businesses.
Part of this process means trying to gauge the profit that could be made from the investment. While you won’t know for absolute sure, you should perform the research needed to get a close approximation as well as the odds for that outcome occurring.
If you find that there is a 70 percent chance that making the investment will produce an additional profit of $1 million, it may be a good idea.
Alternatively, if the foreseeable profits are moderate at best or only pay for the expense required to make the investment, that money would probably be better allocated somewhere else within the organization.
Investing in Technology Requires Investing in Training
You also need to actually consider costs related to the technology apart from the hardware and software itself. One of the biggest expenses will be related to training employees on how to use that technology to reach the company’s goals.
Companies spend $1,208 to train each employee. With more tech training, this expense could increase. If the tech in question is needed to effectively manage the company, you will also need to integrate that technology into your leadership development program.
Technology can make the difference between developing a strong competitive advantage and losing your profits to more tech savvy competitors. Certainly consider different ways to invest in tech in your company. However, do so strategically and only when you have substantial research and reason to believe it will increase your bottom line.