Adding new technology to your business? Make sure you increase profit - not lower prices!
Business owners and startups: technology is the “great enabler”, it’s true. But make sure you enable it to increase profit, not lower your prices!
Technology is wonderful for business, make no mistake. It helps you deliver a more efficient, consistent and effective outcome.
For instance, using technology to improve efficiency with compliance and administrative activities gives you more time and resources to apply to value-producing activities like marketing and sales.
But let’s dispel a myth. Just because you use the available technology to be more efficient, you don’t have to lower your prices.
Don’t fall for that rubbish.
The product or service you provide still has the same value to your customer. If it takes you less time and money to produce the same outcome, that should be to your benefit.
You’re in business to make a profit. And you should use technology to help you increase profit.
Increase profit through technology: free or paid apps?
Most technology-based tools of any value to a business come at a price.
Sure, there are free versions of many tools but they often impose limitations on volume of data and/or access to features.
After all, the vendor needs to make money too. They want you to upgrade to a fee-paying “business version” of the app.
Free software tools may be the first production version of a new tool.
The developer keeps it free to make it more accessible and increase user numbers. With more people using their software, they obtain more feedback from users. This tells them important information about how well it meets the needs of users, what the priority areas are for improvement, and what additional features or capabilities are needed.
The software developers then use this feedback to develop a better product that more people are willing to pay for, hopefully at a higher price.
Free versions or software products that have small numbers of users may seem like a bargain at first. But this type of technology can create other inefficiencies in your processes.
A “work around” using a manual process or by using another piece of software to “fill a gap” can result in this new process being less efficient than the one you had before!
Increase profit through technology: hiring the right expertise
There is also a value in knowing how to use technology effectively. That may require the expertise of a professional.
Technology allows you to be more efficient but if you don’t know how to pilot the spaceship you end up with more garbage in the wrong place, faster!
Just because you have a brand-new tool doesn’t mean you’re going to be more efficient.
This is where getting advice from an experienced professional helps you optimise the results from implementing new technology or processes.
You go to a professional because they have a skill, not because they use a certain piece of technology (unless of course you want them to train you on using that technology).
It would be like using a plumber because you love the brand of ute he drives. It’s just ridiculous. The technology is simply a tool used by a professional.
Using these tools allows professionals to be more efficient at delivering better outcomes for you. But they are still exercising their skill and judgement.
Often, they can help you implement a new system (tool) or process that adds value to your business in terms of:
Better quality outputs
A more scalable system
A better work environment
You should be using technology, processes and systems to get better results like these in your business.
Increase profit through technology: get clear on what you want to achieve
The use of technology is meant to enable you to run a more efficient business and increase profit.
You increase profit by raising the sales price, volume and/or frequency to the right customers. Being able to deliver sales of your product or service more effectively also increases profit.
So, technology needs to support the sales and production processes that will provide the best outcome to your business.
Designing and implementing these processes are critical steps to get right. Failure to plan by carefully determining the desired outcomes can result in higher costs, frustration, and lost opportunities.
So, when designing any new system or introducing a new process, first ask yourself:
“What do I want to achieve?”
“What’s the benefit of the process that I am trying to create?”
“What value or saving do I expect to achieve by doing this?”
“What is the expected timeframe for seeing that result?”
Answering these questions help you identify what you want the process, system or tool to do. It also helps to put a value on the expected benefit in terms of increased sales, reduced cost, time saved, better sales conversions, etc.
Having identified what you want the process, system or tool to do, you need to make it happen.
And doing that will then help you increase profit in your business.
Need help with increasing profit through the use of technology? Contact us to arrange an initial chat.