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Small Businesses Cutting IT Spending Could Be Cutting Their Own Throats

A line in the 1970 classic song “Ball of Confusion,” by the Temptations, could easily be describing life for small businesses in 2011: “Fear in the air, tension everywhere!”

The American economy is built on consumer confidence, right now, it’s pretty hard to be confident. Maybe you’re out of work or a family member is looking for work or you’re working and afraid of being laid off.

If consumers are afraid to spend, the small business owner is also forced to cutback on his expenses too.

Unfortunately, many small businesses are deciding not to purchase new computers to save money. On paper, it seems like a wise move not to use valuable capital to upgrade to new technology. However, the long term risks of a small business not upgrading may be greater than short term financial losses.

Keiichi Nakata of Great Britain’s Henley Business School believes to attract younger workers, businesses need up-to-date technology. College graduates are shocked finding that the new technology they used in college is not available in their new work environments.

A recent HP survey of more than 500 small business IT managers say 93 percent of companies have decided not to purchase new technology because of costs.

According to the IT managers, this decision leads to 89 percent of these companies’ IT problems. Like an old car, you can’t continue to patch up an old computer forever.

The survey conducted by Wakefield Research found companies who did not purchase new computers experienced these IT problems:

(1) Low-performing hardware.

(2) Out-of-date hardware.

(3) Unreliable hardware.

In the long run, not investing in new computers led to small businesses having less-than-efficient output and a loss of productivity.

According to Stephen DiFranco, Senior Vice President at HP: “The survey findings confirm that budget-constrained small businesses are playing a tug of war when it comes to balancing smart IT purchasing decisions and their budgets.”

With less revenue coming into your cash register, it is only natural for small business owners to scream: “Let’s stop spending.”

Even the Federal government is at odds with itself over whether to spend more money to jump start the economy or cut spending and balance the budget.

There is no clear black and white answer on what to do.

Each small business person has to look his or her own unique situation.

Your long term goal should be keeping your business afloat and riding out this bad economic wave.

 

However, sometimes even a small business has to think boldly, look pass short-term economic pain and think long term economic gain.

 

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About Jordan Brown

Jordan Brown is a veteran Writer/Journalist/Actor based in Harlem NYC. The DC native has also called Los Angeles, Chicago, Memphis, Pittsburgh, PA, Oslo & Bergen Norway "Home." Mr. Brown spent many years as Senior Producer at ABC, worked as War Wire Editor at Fox News Channel & Business Radio Producer at Black Enterprise. Since 2005, he has been Publisher-Editor of "The FREE Jordan Brown JOBS Report" http://www.thejbreport.blogspot.com. His personal mission is to help fellow creative media people find employment in these trouble times!

One thought on “Small Businesses Cutting IT Spending Could Be Cutting Their Own Throats

  1. avatarAnonymous

    Jordan, HP’s study certainly raises some valid points on the struggles for SMBs when it comes to IT spending; thanks for sharing their research. While many SMBs may be cutting back on computer purchasing, CompTIA identified another interesting trend that many SMBs are moving toward larger investments in mobile and cloud computing. These can serve as complementary or alternative ways to store and use data in a cost-effective way. This is something we’re seeing a Symantec as well. For additional background on SMB IT spending, you can get our take on CompTIA’s survey here: http://bit.ly/s8Q6Tb.
     
    Chris Halcon
    Symantec

    Reply

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