When I was planning my wedding, I wanted a small wedding because I wanted to avoid all the excess and cost of “big” weddings. I was able to keep the wedding attendee list to under 25 people, but I didn’t completely avoid all the crazy of a big wedding. That’s because no matter the size of the wedding, it is still a wedding.
It is the same with businesses. No matter if you are a solopreneur, micro, small, mid-marketing, or big business, you are still a business. You still need to manage many of the same business processes. For a professional service business of any size, these are the common business processes:
Marketing and social media
Sales including contracts, invoices, and payments
Client management including on-boarding, service delivery, and relationship management
Time tracking of service delivery
Document and asset management
Accounting and bookkeeping
Security, backups, and general IT
As with weddings, it is easy to get carried away with spending. You are bombarded with advertising on what you should get, fear of not doing enough, and the sense of urgency to make a decision. It is a perfect storm to overspend.
Deliotte’s research on technology budgets points to an average spend for all industries as 3.28% of the total revenue for the business. This is a great starting point, but the research is based on technology spending for businesses that have office space, significant number of employees, and business infrastructure requirements. As solo and micro-businesses, we don’t have the same technology infrastructure needs as a much larger business because we don’t need technology for the physical space, HR management, IT asset management, and the list goes on.
How much should a business with 1-5 employees / contractors be spending on technology?
For a business that has been around for 2 years or more, your technology spend should be 1.5% of your annual revenue. Although the percentage is small , it is a fair amount of budget for technology. Here is a breakdown of the technology spend by common annual revenue milestones for micro-businesses.
This is a barometer to measure how much you are investing in your technology for your business because every business has variations. For my business, I am at 2% technology spend, which is due to the type of work that I do. I am a technology and automation expert. My business processes need to be good examples of best uses of these tools. Also, I am investing in technology slightly ahead of my annual revenue because my business is growing. It is always better to be prepared for the next stage.
Bottom line: Spending more on technology doesn’t necessarily mean you are getting more out of the technology. Just like with anything, more simply means more unless you have an intentional technology strategy. For recommended technologies that are perfect for solo and micro-businesses and the way to think about your technology strategy, visit my Business Tools page.
MSD Advisors is passionate about creating kick-ass systems that unchain you from your desk and get you out into the sunlight! After working together, you can say goodbye to frenetic action and worry because your business will run like clockwork. You will reclaim time to focus on well, whatever you want!
There is no better time than now to get started! Schedule a breakthrough call today.