As we’ve previously discussed, the basic idea behind business is exploiting differences in pricing. With this concept in mind, technology becomes a way to enable businesses that couldn’t exist without technology.
For example, websites that offer free classified advertising for individuals and are supported by a few ads from large businesses or an advertising network like Google Adsense, couldn’t have existed before the internet. The cost of printing and distributing newspapers containing just classified ads was high enough that a free model just wouldn’t work. However with the Internet, the cost of “printing” and delivering the ads becomes close to nothing.
There are other businesses that are using technology to lower there prices because they are able to get efficiencies that were never before possible. One example of this is the growing number of businesses that consist of just one or two people. In the past, many of these businesses would have needed a large support staff to handle accounting, billing, etc. With modern technology, these businesses are able to do much of the work themselves using specialized software and outsource parts like payroll to companies that rely on technology to offer services at a lower price that would have ever been possible before.
When working on your own business, try to identify the work done by employees that could be done by technology instead. Sometimes it is more cost effective to use real employees. For example, getting a computer to answer your phone will probably not help your bottom line. But setting up a computer that automatically keeps track of inventory based on data from your point of sale machines could reduce the need for costly manual inventory audits.
The key thing in choosing technology is to make sure you are focused on a realistic payback. A technology investment that has a payback of 10 years, is probably not a good investment because your processes will have changed in that time.
Most businesses have many areas that are “low hanging fruit” where a very modest investment in technology can create tremendous savings. The successful business person practices identifying these areas.