5 Questions to Ask Before Investing in People or Technology
Congratulations. Your startup made it through its first challenging years, and you’re seeing positive returns. But, there’s always room to grow. Is it time to hire more salespeople, or should you invest in customer relationship management (CRM), productivity software, or another technology that can improve your business?
The choice between putting money into technology or people isn’t easy, especially for a young company that can’t afford a financial misstep. Before making decisions about where to funnel your hard-earned profits, ask yourself these questions:
1. Does your company have the expertise necessary to solve problems on its own? If the answer is yes, then there is probably a technology solution that can help you address business improvements. However, if you aren’t sure where to begin or where to go when a problem arises, then you need someone to advise you; in this case, you’re better off hiring someone with the expertise in that area to guide you toward a solution. There may be occasions when you’ll need to invest in both people and technology to properly address a given challenge within your business.
2. Is there a process or task that can be more efficient? Every business process can be improved in some way. Very often, what worked well for a 10-person company is no longer effective for a growing business. This is where technology is often the best solution. There is no denying the speed and efficiency of modern-day technology, which is why we use calculators for math and software to do our taxes. Technology is precise and consistent in a way humans can’t be. If certain processes can be streamlined, consider what automated solutions can ensure seamless and consistent results. This can also create a ripple effect by giving staff more time to focus on other priorities and improvements in the company.
3. What kind of investment can you afford to make right now? Is your business strapped for cash, or do you have the budget to make long-term investments? It’s important to remember that hiring a new staff member costs much more than an annual salary, especially when you factor in recruiting efforts, benefits, office space, and training. It’s a large recurring investment that will continue to be more expensive each year the employee stays on, as annual raises and bonuses come into play. However, the benefits of a tenured employee with years of institutional knowledge, experience, and contacts can be invaluable for a growing company. On the other hand, technology investments often require a larger upfront cost. The good news is that once a system is installed, the subsequent maintenance costs and fees are significantly smaller. It’s essential you measure the return on investment (ROI) – both financial and otherwise – before making this decision.
4. Do you need a personal touch? It’s important to consider what your prospects want and, perhaps more importantly, what they need to become loyal customers. For example, online food delivery services have tremendous success because research shows customers don’t want to interact with employees when they order food. Technology investments can replace simple tasks, such as ordering take-out, to make customers happier. However, certain jobs require personal interaction. Employees should handle jobs that involve sensitive situations and customer satisfaction, such as customer service. Keep in mind, a personal touch can go a long way.
5. Which investment will improve your bottom line? The goal for every business is to increase sales and profits. Technology can smooth the sales process by increasing the efficiency and organization of your sales team. However, at the end of the day, people are buying from other people. Most sales teams can never be replaced by technology, but they can certainly benefit from its support. Think about what your sales team needs to succeed and find them the proper solutions, or best people, to help.
Ultimately, when weighing the benefits of an investment in people versus technology, determine which business functions will have the most impact on your organization. Then, consider how best to improve those functions. In most cases, you’ll find a mix of talented people and great technology is the best solution.