RESEARCH TRIANGLE PARK, N.C. (MainStreet) -- One of the toughest financial controls an organization can put in place is evaluating expenditures in terms of need -- for instance, if you can't do business without it -- versus want, which are those things that are nice to have, fun to have and may make life easier, but won't stop us from doing our jobs if we don't have them.
We live in a time in which technology, tools, products and services change "versions" with increasing rapidity. Take the iPhone. The sixth generation of Apple's (AAPL) iPhone, the iPhone 5, was released Friday. It's hard to believe it's been only five years since the first one was introduced in January 2007 (although it went on sale in June). The 3G version came on the market in July 2008. The fourth generation phone was released June 2010. The fifth generation (the iPhone 4s, with Siri) came in October. The technology leaps between each of these devices is pretty amazing.
When it comes to business, the reality is that the faster and more efficiently you can operate, the better your performance is. If you are "connected" via technology and your client can reach you for an important matter -- say, to order a product or to address a quality issue -- being reachable 24/7/365 via email or phone is important. The question, though, becomes if that "connectivity" need translates into a constant evolution of technology. Your entire sales and executive team may want the latest and greatest iPhone, but do they really need the upgrade?
Please note that I am not saying anything for or against Apple, the iPhone or any other product or service. But when evaluating whether you and your employees need the newest version, you have to step back and look not at what we want but what will enable you to do better business.Every dollar we spend is a dollar we must earn. If it will not save us time and money then we have to be willing to say "no." It can be disastrous for a business to spend money needlessly. Many a business has spent on wants and nice-to-haves, only to find there is no money left for the must-haves. Several years ago I met with owners of a small business that was at a significant growth point. They needed some core infrastructure put in place: computers, employees and physical space. One of the two owners began the meeting telling me about this "great deal" he had gotten on a piece of equipment that would be used to serve the customer -- a $75,000 piece of equipment that was a bargain at $50,000. It was indeed a bargain ... if they had needed the capacity. But they didn't. And $50,000 was not an insignificant amount in the budget -- in fact, that $50,000 would have paid for all the computer equipment and one additional person's salary and benefits. The company's owners bought something they "wanted" because it was good deal. What they needed, and ultimately were not able to acquire, were computers and a staff member. This decision translated into lost customers. They had the capacity in technology to provide services but did not have the capacity in staff to schedule, bill and provide customer service after the sale and job was done. Personally, I want a number of the latest greatest and coolest pieces of technology, and I often indulge my desires for them, but what ultimately determines if I will be in the Apple store buying the iPhone 5 in the near future? The cost of ownership (including data plans, etc.) and how the technology will make doing business easier and more efficient. The bottom line is: Will having the newest gadget enable me to do better for my customers? If you see me with an iPhone 5 (or any other smartphone, for that matter) in the near future, you will know that the return on investment translated into a need to do business better, not simply because I "wanted" one.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV