“All companies are technology companies now.”
So declared media giant Thomson Reuters in 2018. That tenet of modern business is as true for small companies as it is for Amazon, Alphabet, Tesla, Ford, and other members of the Fortune 500 crowd. No matter the industry and no matter the size, “companies that best use technology to create competitive advantage will win.”
Converting technology into a competitive advantage begins by carefully planning the company’s budget for small business technology tools that maximize the returns it receives on its investment in hardware, software, and tech services. However, few small-business owners possess the technical background required to determine which tech products are the best fit for their needs. Small businesses need to understand the ins and outs of choosing the technology products that will give them an edge over the competition without tying up resources unnecessarily.
What Small Businesses Want From Tech Tools in 2020
Inc. quotes a small business advisor who describes budgeting as “a roadmap for your company.” The purpose of a company’s budget is to serve as the blueprint for achieving its goals. These are the three basic components of any budget:
- How much money it currently has
- How much money it needs to spend
- How much money it needs to bring in to meet its objectives
No matter what type of business you run, a larger share of its budget will be devoted to technology products. All Business cites a survey conducted by CompTIA that found 64% of small business owners identify technology as a primary factor in reaching their goals. While 59% of small businesses state that they are “mostly satisfied” with their use of technology, they also name several areas where tech products come up short:
Tech Product Requirements for 2020
|Integrating various apps, data, platforms and devices||38|
|Upgrading outdated equipment and software||31|
|Increasing ROI for their tech spending||31|
|Next-generation customer engagement||28|
|E-commerce and mobile commerce||
Increased Adoption Rates: Getting More Bang for Their Budget
Small businesses understand the potential benefits of new technologies, yet they remain relatively frugal in their tech-spending plans. The 2020 State of IT report published by market research firm Spiceworks found that 60% of small businesses (those with 1 to 99 employees) expect to increase their revenue in 2020 over 2019 levels, yet only 37% of these businesses plan to increase their IT budget in 2020. The top reason small businesses will increase their IT spending is to upgrade or replace outdated infrastructure (68%), followed by the need to accommodate employee growth (47%).
It’s no surprise that the largest share of a small business’s IT budget is spent on hardware (35%, down from 42% in the 2019 survey) and software (31%, up from 26% in 2019). However, hosted and cloud-based services (22%, compared to 20% in 2019) and managed services (11%, compared to 9% in 2019) represent a growing share of spending on small business technology tools.
The technologies that are expected to have the highest adoption rates among small businesses in 2020 are IT automation (44% currently use and 19% plan to purchase in the next two years) and Gigabit Wi-Fi (43% currently use and 20% plan to buy in the next two years). Other technologies that are forecast to impact small businesses in 2020 are the Internet of Things (IoT), artificial intelligence, and serverless computing.
The Right Small Business Technology Tools at the Right Price
No matter the size of the business, success depends on keeping your customers happy. Small Biz Daily reports on the results of a recent CompTIA survey of small businesses that found their number-one technology priority is to improve the customer experience, followed by worker productivity, and infrastructure upgrades. The greatest technology challenges faced by small businesses are cost of entry (46%), technical training (44%), and identifying the best vendors and suppliers (40%).
Small and midsize businesses struggle to determine how much to spend on their IT budget. A CompTIA survey on buying trends among SMBs indicates that 39% of the companies surveyed believe their company spends too little on technology, 44% believe their IT spending is “about right,” and only 17% state their company overspends on technology. CompTIA identifies the “sweet spot” of IT budgets in the range of $10,000 to $49,000 per year, which breaks down to about 7% of their total revenue being spent on tech products and services.
The high cost of entry prevents small businesses from adopting emerging technologies such as AI and IoT, although they are more willing to implement new tech products that promise to boost their productivity. Two-thirds of SMBs surveyed by CompTIA will choose an emerging technology if it will make their operations more efficient, increase their revenue, or reduce their costs.
The caution many small business owners exhibit toward new tech products and services is balanced by their desire to keep pace with their customers’ preferences and to avoid being left behind by their competitors. When the time, the price, and the product are right, they know that their investment in new technologies will pay dividends in the future.
Learn more about how the talech POS system helps small businesses improve the experience for their customers and optimize the management of all their operations. We work with you to determine the best ways to meet the needs of your customers and employees so your business can thrive. We take the time to learn your business so we can balance your specific needs with your budget and comfort level in a custom POS system implementation. The result is a valued investment that will pay for itself in short order. Reach out to us today to sign up for a free demo and learn more about how talech can be your valued partner in the POS world.
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