Where are small businesses spending their money? According to Crowd Views: Edition 3, a report from B2B software review site G2 Crowd, marketing/advertising, new equipment and IT systems head the list. Overall, 77 percent of business owners in the survey are investing in growth this year, up from 63 percent in 2016.
The report differentiates between businesses that are focusing on growth this year and those that are in “maintenance mode.”
Here are some important differences in how the two types of businesses invest their money.
- Businesses in growth mode are more than twice as likely to be planning investments in software, cloud services and other IT systems than businesses in “maintenance” mode (20 percent vs. 8 percent). What’s more, 47 percent of growth businesses compared to 17 percent of maintenance-stage businesses are spending more on IT this year than in 2016.
- Growth businesses are also more likely to be investing in new employees (23 percent vs. 8 percent), especially salespeople.
- Growth companies are more likely than maintenance-stage companies to outsource business processes such as payroll, accounting and website design.
- Growth companies also use a wider range of sales channels than companies in the maintenance stage. Some 57 percent of growth companies use ecommerce (vs. 43 percent of those in the maintenance stage) and 52 percent use direct sales (vs. 37 percent of those in the maintenance stage). Growth companies are also more likely to sell via value-added resellers (VARs), affiliates and online marketplaces such as Amazon.
Benefits of Cloud Computing, SaaS and Outsourcing
Using cloud services, software as a service (SaaS) and outsourcing have many benefits for business owners, according to the survey. It reduces the amount of investment the company has to make in services outside the core business, so that more money can be invested in business growth. By offloading these non-core services, employees can spend their time focusing on what differentiates the business from the competition.
Overall, 51 percent of survey respondents say outsourcing is an important part of their business plan. The processes that are most often outsourced are legal services (36 percent), payroll (36 percent) and bookkeeping (31 percent).
Most businesses are already using IT systems to handle operational functions systems such as accounting, payroll, CRM, customer support, email marketing, HR management and marketing automation.
Less popular, but growing in adoption, are IT tools to help with collaboration. These include business content management solutions, cloud-based information storage and sharing tools, project management tools and team collaboration/messaging software. Growth companies are almost twice as likely as companies in the maintenance stage to have IT collaboration systems already in place.
Getting Over the Technology Adoption Hurdle
No matter how helpful new IT systems will be to your employees and your business in the long run, convincing your team to adopt the new technology can be a struggle.
To smooth the bumps along the road and encourage your team to embrace the new technology tools, the report suggests these steps:
1. Create a sense of urgency. Change is inherently stressful. The law of inertia means most employees will dawdle or outright avoid learning the new system if left to their own devices. It’s up to you to convey a sense of urgency so everyone learns how to use the new technology.
2. Develop a vision. What is your vision for what the new technology will help your business achieve? What will success look like? Creating a short vision statement (a few bullet points) will help you keep your end goal in mind.
3. Communicate. In order to get your employees on board, you need to communicate your vision. Communicate to employees how the new technology will help them save time, do their jobs better or otherwise positively impact their work.
Check out the full report to see the most popular IT systems among business owners in the survey.
Need more help upgrading your business’s IT? Your SCORE mentor is ready to assist. Get matched with a mentor today for free business consulting and advice.