| (Eleventh instalment of the upcoming book Natural Enterprise. List of previous instalments here.)
A lot of readers of How to Save the World will probably be disappointed with this chapter in my upcoming book Natural Enterprise for two reasons: I’m not going to plug any specific vendors of technology for small business (although I’ve identified quite a few, including some regular readers), because by the time the book comes out this information could well be obsolete. (When the book comes out there will be a companion website with a list of recommended vendors of technology, though, so don’t despair). And although buying technology is one of the most fun parts of new enterprise formation, my advice is to buy as little as you can get by on. Most entrepreneurs, in my experience, go overboard.
There is no blueprint ‘best answer’ for what technology a new entrepreneurial business needs. It depends on the industry in which you operate, the number and location of your customers and products, whether your product or service can or should be effectively offered online, and a host of other factors.
So the first thing to do is develop a Technology Plan. Although you can hire a consultant to do this with you (don’t let them do it for you), you can also develop the draft plan yourself and then run it by tech-savvy people you know, and (more importantly) other, established entrepreneurs you know with businesses of a similar type and style to yours. The entrepreneurs who’ve already gone through this process can tell you what you really need, and how to avoid the missteps they made, and this can really save you money and grief. You also need to talk to some prospective customers about your Technology Plan, because if it’s inadequate to meet their expectations you’ll need to re-think it. And if they shrug and say it doesn’t matter much to them, that probably means your technologies are mostly internal, back-office tools: Avoid spending too much on toys your customers (who ultimately pay for them) don’t see or benefit from.
The Technology Plan need not be long, but it does need to be carefully thought through. Here’s a checklist of the types of technology it should address. For each type, you’ll need to assess whether you need it at all (some manual alternatives work just fine, and will do so even when your business scales up), identify and evaluate the alternative tools available (including an increasing number of free alternatives), and budget when to buy and how and how much to pay for each.
Telephony: Most telephone companies offer packages designed for entrepreneurial businesses. It’s essential that your telephone system, often the first point of contact with new customers, be reliable and professional. Consider voice messaging, call waiting and call routing needs. Look at them from the customer’s viewpoint. Consider VoIP alternatives including free (but not yet ubiquitous) solutions like Skype.
Fax: I keep thinking fax is dead. It isn’t, yet. Avoid the hokey systems that require customers to call twice to send you a fax.
E-mail: If you want to be taken seriously, you need your own e-mail/web domain, even if you don’t have a website. Make sure it’s short and easy to spell. Shop carefully — prices are all over the map. Cardinal rule of e-mail: If you give your e-mail address to customers, check your e-mail very frequently (route it to someone else in the business if you can’t) and respond to customers immediately.
Public Website: Depending on your business, this may be the most critical technology you buy, or you may not need one at all. Talk to as many others as you can before deciding what you need and who to buy from. You will probably need someone to host your website, and the package the host provides will probably include software to build and maintain your web pages, and limit the size of the site and the volume of traffic (beyond which you pay extra). Most hosts also offer scalable additions for e-commerce at an additional price: Product catalogue, shopping cart, order management and credit-card handling etc. Beyond that, the sky’s the limit: You can add functionality to do online surveys, offer multimedia presentations, provide help-desk support for your products, and many other business applications. As with telephony, think this through from the customer viewpoint: What do they want, what do they need, what might they actually not want to see on your site. Keep it as simple as possible, easy to use, clean-looking, and professional in appearance. If you’re not taking orders for your products over the Internet, it’s unlikely that putting marketing information on your website will produce much benefit: Focus your site content instead on educating your site’s readers. If you give people useful information ‘free’, they’re more likely to want to buy from you. Exception: Put a few, enthusiastic, signed customer testimonials at the top of your site (but get the customers’ permission first). And make sure your contact information is up there with it, and that you’re there to take the calls when they come in. And give your customers a simple way to give you feedback, good and bad, on your site. The good feedback can be the basis for testimonials and viral marketing. If you don’t give them a simple way to vent bad feedback to you directly, they’ll vent to others (including potential customers) instead.
Financial Information System: Depending on the nature of your business, you will have certain statutory reporting and filing requirements for your business. Technology can automate these somewhat, but unless you have a lot of small transactions (purchases, payments, sales and cash receipts), or a lot of different products and services that you need to track and inventory separately, technology isn’t going to reduce your paperwork burden that much or tell you anything you don’t already know. Find a financial system that meets your needs, not the government’s. That probably means a system that will allow you to budget, forecast and monitor cash flow day-to-day, easily. Don’t buy a huge, complex accounting package with thousands of General Ledger accounts and reports you don’t use to manage your business. Again, thinking of the customer first, you want invoices and other financial paperwork that is visible to the customer to look professional. If you have a lot of employees, consider outsourcing payroll and HR records management — it’s usually the most cost-effective application for small enterprises to farm out.
Customer Information System: If you have (or hope to have) a lot of customers your first database application will probably be a customer information system, listing contact information, sales calls (held and scheduled) and successes. A simple spreadsheet application (free over the Internet) will probably suffice until you get more than, say, 100 customers.
Order and Inventory Management System: Depending on volume and nature of your business, you may need Point-of-Sale (POS) and Inventory Management software to keep track of what and how much you’ve sold. Most entrepreneurs don’t have enough distinct products or enough individual transactions to require this, and some accounting packages include rudimentary invoicing and inventory management capability.
Intranet: Once you reach a certain size, or if your organization is virtual (i.e. your people are physically scattered), you’ll probably need some kind of internal website, a space behind a firewall where your people can communicate and collaborate. Don’t design it in a laboratory — get the people who will use it to design it with you. Possible applications are: Scheduling and calendaring, Document- and file-sharing, Internal e-mail and instant messaging, Internal newsletters, Housing databases purchased from outsiders used by all employees, Hosting collaboration and project ‘spaces’ and tools. Your work colleagues will tell you what they need, what makes sense to share, and to what extent (e.g. setting up meetings automatically for other colleagues) they’re willing to allow technology to impose on and make some decisions for them.
Desktop Publishing and Marketing tools: Unless others have told you that you have a real flair for this, or it’s your business, this is best left to professionals. If you’re relying on viral marketing you need very, very little marketing material. A business card, a brochure, a simple website — that’s probably it. Get some one-time professional input on these, and then leave them alone. I know, designing these things yourself is fun. But it’s not the best use of your time. And the results can be truly ugly.
Computers, Mobile Devices and Local Area Networks for the Front Line: Let the users specify what they need, hardware, network and software. Consider free alternatives to the major business software packages. Stress connectivity applications over processing power, memory and multimedia applications — they’re the ones with payback. For applications essential to your business, make sure you have backups for everything — the data, the hardware, the customer connectivity. Even the smallest business needs some redundancy and security systems. Customers just won’t tolerate ‘down time’ anymore. But the more sophisticated your systems, the more costly the redundancy and security systems become — think about this before you go for wireless networking.
Weblogs & Social Networking Applications: I am of course biased about these technologies, but I’m the first to admit that they aren’t the easiest to use, they aren’t for everyone, and they aren’t yet ready for prime time business application. If your colleagues are weblog-savvy, consider them for specific business purposes: Capturing valuable business lessons, Archiving subject matter expertise, and as a Substitute for internal newsletters. And consider running a weblog as an adjunct to your public website — they can be informative and engaging for customers and prospective customers, at minimal cost. And keep a close eye on the burgeoning world of social software: There is a burning need for better tools and databases that can help entrepreneurs find partners, colleagues, advice, information in context, and even customers. Someone’s going to figure out how to meet this need.
Once you have your Technology Plan completed and vetted by users, customers and other entrepreneurs, you have one more critical decision to make: Lease vs. Buy. This decision is getting more difficult as the number of creative financing alternatives increases. There is a new phenomenon called “pay as you go computing” that looks at most or all of the above technologies as a single computing ‘utility’. There are companies that now offer ‘utility’ computing packages, where you outsource all of the purchasing and maintenance of the technology of your business to a third party, in return for a single monthly payment that varies with your usage. The big computer companies are likely to offer ‘utility’ computing by the end of this year, though probably on a less extensive and less flexible basis. Unless you’re a whiz with numbers it may be hard to figure out whether to go for such a plan or not. My advice: Gather up all the costs and the leasing, financing and ‘utility’ computing quotes, buy your friendly accountant lunch and have him compute what’s the best deal. That goes as well for any lease vs. buy decision in your business: Cars, premises, and machinery. The calculations are complicated but straightforward — if you’re an expert in Present Value computations and discounting variable cash flow streams.
Not only is the array of technology choices dizzying, it’s changing daily. That’s why the key is to leverage the Wisdom of Crowds: Talk to a lot of people, especially other entrepreneurs, who are usually all too willing to tell you their technology success stories and horror stories. It’s all part of the homework for building a Natural Enterprise.
OK, dear readers, this is the chapter of Natural Enterprise that I feel least confident, and competent, writing. So please tell me: What’s missing, and what have I got wrong? Remember that this book is for the novice, so I’ve tried to keep it simple and jargon-free. This chapter will get the last re-write just before the book goes to press, but I’m still worried it will be obsolete by the time the book hits the stores. What do you think?
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