Biz Talk: Technology and Your Business

Every business is only as good as its management—and the technology it utilizes.

Business owners and managers make a lot of decisions which depend on the availability and quality of information. While most of these decisions may not have an immediate and critical impact on your business, one bad decision leading to another may affect your profitability in the long run.

For instance, in the food retail and service industry, the most common problems are wastage, spoilage and pilferage. When you only have a small amount of working capital, you have to sell food products that your customers buy every day. You have to keep an inventory of food items that will sell fast, especially because of spoilage.

You can easily keep track of sales and item movement or turnover by using an automated inventory management system instead of just a simple cash register.

A computer-based inventory management system captures all necessary data from each sales or purchase transaction. The data are stored, processed and organized by the Point-of-Sale (POS) system to produce reports that are useful for operational management decisions—what, when, where and how many items to order or replenish. These reports can show which items move fast at specific times each day, which items have high or low profit margins, your average daily sales, peak times, and so forth.

Most of these integrated systems include employee attendance and payroll modules which simplify personnel administration. Employees log their clock-in and clock-out times electronically through swipe cards. This helps minimize the time it takes to compute total hours worked and pay amount.

All transactional data are seamlessly transferred to the accounting module to minimize or eliminate the manual bookkeeping process.  

Before we opened CoffeeShop Treats LLC*, I asked our accountant for advice regarding our Point-of-Sale (POS) system because it needed to be able to integrate smoothly with our accounting software, which generates all the information needed for our tax obligations.  

When making purchase decisions, you should not rely solely on your suppliers’ advice, because it's their job to convince you to buy their product. You will not get an impartial product review, especially from a novice sales representative. You should ask the advice of owners or managers who have been using those products at businesses similar to yours, but don't expect that all owners will be helpful. Some are not willing to share information.

When considering a technology purchase, it may be helpful to determine which specific decisions you have to make in your business and work back from there.

The computer system you choose—both hardware and software—should be worth your investment. It should be able to help you make effective decisions and conduct efficient operations that will result in significant savings of time, money and physical energy.

Technology can be your best business weapon if evaluated and selected properly. Take time to do your research and planning for this kind of investment. Good management starts with wise investment decisions.

*CoffeeShop Treats LLC, a bakery cafe business, was sold in 2007.