How Much Technology, and How Much To Pay? (Part 1)

My wife was in private practice for eight years. Too many nights she would come home and sigh, “In medical school, they taught us how to practice medicine. They never taught us how to run a medical practice.”

Usually people go into a specific small business because they have a passion or talent for it. They like grooming dogs, or making flower arrangements, or solving electrical wiring challenges. But that doesn’t necessarily mean they understand the fundamentals of running a business – hiring and firing, marketing and selling, or identifying the right technology for their business.

I am probably not the best person to advise you on the first two items, but I can help with the third one. The third one is actually the most complicated. With the first two, there are basic management and promotion rules that, once you learn them and put them into practice, stay with you throughout your career. Technology, on the other hand, keeps changing. It’s important to understand and estimate your costs, because they can vary widely, depending on what you want to achieve.

But the payoffs are palpable. More than ever before, an SMB can take advantage of technology to look and act big. But knowing what’s out there, and knowing what (and where) to spend, means gazing out on a whole different landscape. In fact, in the last five years, technology for small and midsize businesses (SMB) has undergone the most rapid changes I’ve seen since the debut of the personal computer back in the 1980s. Here’s why:

Almost every business activity uses technology. From online banking to scheduling service calls, there’s a computer involved to keep track of what you’re doing and where you’re going.

Hardware is less expensive and more powerful than ever before. The smartphone you carry in your pocket is more powerful than the first mainframe computers, and oh by the way, lets you conduct business from anywhere. Servers, laptops, and desktops are also more economical than ever before.

Hosted systems. Ironically, though, you don’t even need computers in many situations. Hosted systems, aka “software as a service,” gives SMBs access to applications that only large enterprises could afford previously.

Globalization. If you’re an entrepreneur, you may be tempted to vilify other people who take advantage of the economies offshore hiring provides. But when it comes to coding Web sites, or building customized applications, you’ll find that the cost differential can be astonishing. There are other issues, such as language and cultural differences, but that’s another topic.

So in the next three installments of this column, I’m going to walk you through the process of how to identify your technology needs in three areas:

•     Financial Systems
•     Marketing Applications
•     Business Support

We’ll talk about your technological options (especially compared with other possibilities), and discuss how to find vendors and suppliers, depending on your needs. I welcome questions, suggestions, and ideas for what you want to see covered.