When your business operates on a shoestring budget, new technology purchases fall to the bottom of the priority list. After all, when your imperative is to increase profits, your focus is on growing sales and streamlining operations, not spending money on major purchases. However, failing to budget for updated technologies is a shortsighted decision that could threaten your business’s long-term success. Not only is Information Technology (IT) central to your company’s ability to scale, but IT gaps in the wrong places expose your business to costly risks.
Here are four instances when skimping on technology that could cost your business, and how you can avoid exposing yourself to risk.
- When You’re Targeted by a Cyber Attack
Small business, small cybersecurity budget — right? Not so fast. Even small businesses are targeted by cyberattacks, and when they are, the damage can be even more catastrophic than for big businesses. That’s because small businesses often lack the financial cushion to weather a cyberattack, and even if they pay to recover their data, they may never recover from the hit to their reputation. Even if your company is never affected by a cyberattack, failing to comply with security standards could still cost you.
Companies that do business with EU residents are subject to rules put forth by the General Data Protection Regulation even if they’re based outside the EU. Among other rules, the GDPR mandates that businesses assess data security risks, take measures to resolve them, and notify supervising authorities of a data breach within 72 hours of discovering it. Businesses that fail to comply are subject to penalties including fines.
Your best bet to ward off a cyberattack scenario is through regular monitoring through IT services. You can also work with a quality assurance expert to determine any issues with your website or mobile app functions and to find any weaknesses.
- When Your Hardware Fails
A data breach isn’t the only thing that could lead to costly downtime for your small business. If your outdated hardware suffers a failure, you could be out of commission for days. If your hardware crashes and you don’t have a data backup, your business could be down even longer. When it comes to small business computing systems, it’s better to replace hardware before you’re forced to.
Even before your systems are at risk of failure, you’ll experience costly slowdowns, repairs, and security issues. Instead of waiting for signs of imminent failure, replace computers, laptops, and network equipment on a schedule. Businesses should also check minimum hardware requirements when upgrading software to ensure their existing technology can handle the increased workload.
- When You’re Audited by the I.R.S.
Sure, your bookkeeper might not be the best, and your Excel spreadsheets may be a little old school — but hey, it’s cheap. Or is it? Not only are modern cloud-based accounting tools far more efficient than spreadsheets, freeing up precious labor hours, but relying on manual accounting opens you up to errors that increase your audit risk.
Human error is the biggest source of mistakes in business accounting. This costs businesses in more ways than one, but one of the biggest hits is felt when businesses get audited and end up with an unfavorable adjustment. Rather than relying on a high-touch system, businesses should invest in automated accounting tools and use the money they save on number-crunching to hire a skilled accountant.
- When Your Warehouse Lacks Efficiency
If you run an inventory-based business, then you know that filling orders and managing your inventory is extremely important. And if you don’t have a reliable system in place, it’s only a matter of time before something goes wrong.
So, if you haven’t already done so, it’s important to get a warehouse management system in place to ensure everything runs smoothly and effectively 99.9 percent of the time. Not only does it keep track of your inventory, but a reliable management system also allows you to generate a plethora of different reports and scale your business as you slowly but surely start to expand.
The right technology can make your business more efficient, productive, and profitable. However, small business technology isn’t just about increasing profits — it’s also about reducing risks. While companies with tiny tech budgets might feel like they’re saving money, in reality they’re exposing their business to risks so costly that they could lead to its demise. Make sure you’re accounting for these scenarios in your company’s IT budget, so you stay in business for the long run.
Article written by Gloria Martinez (firstname.lastname@example.org)
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