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(2) Out-of-date hardware.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.