MONEY MANAGEMENT

A column on personal finance prepared by the Virginia Society of Certified Public Accountants

A TECHNOLOGY CHECKLIST FOR SMALL BUSINESSES

(June 23, 2004) — Whether your company makes old-fashioned oatmeal cookies or new fangled widgets, technology can automate processes, streamline financial recordkeeping, manage databases, update mailing lists, and more. But finding and maintaining the right computer system can be a challenging task. To help small business owners leverage technology effectively, the Virginia Society of CPAs offers the following guidance.

› Determine Business Objectives

Since the selection and implementation of technology is one of the most significant business decisions you can make, it is wise to ensure that your technology plan is consistent with your overall business strategy. Start with outlining some of the business objectives you are trying to achieve and determine how the use of technology can help to facilitate them. These can include streamlining company finances by implementing solutions that reduce administrative costs. Consider too qualitative benefits that can be achieved through the use of the right technology, such as improved information and customer service and a reduction in errors when processing information. Prioritize these and other business objectives you may have and integrate them into a technology plan.

› Evaluate Your Resources

When it comes to resources for technology, think about both the budget you have available and the resources needed to utilize the new technology. Having a trained staff to implement the technology you ultimately select is vital to maximizing its benefits. Keep in mind, too, that you may want to phase in certain technology to keep your costs within a realistic budget.

› Safeguard Company Data

A key component of any technology plan is safeguarding company data. Backing up data is critical for restoring losses caused by a computer virus, power surge, theft, fire, flood or other disaster. Thanks to high-speed tape and rewriteable CD drives that hold tremendous amounts of information, backing up your company’s information is easier than ever. Just be sure to store back-up tapes and CDs off site. They will be of no value to you if you lose them, along with your computers, in a disaster that hits your premises. Once you have selected your back-up system, test both the process and the integrity of the data on your backup. Be sure all procedures are documented and communicated to staff.

› Protect Your Computer System

About a million computers worldwide are infected with a virus every day. Viruses can be carried in anything from a floppy disk to an email message. To minimize your company’s exposure to viruses, worms, and hackers, be sure you use the latest patches and system updates for your software. You can usually find patches and program updates on the Web sites of most software manufacturers. Also, adopt a company policy to discourage the opening of unidentified sources of emails or downloading documents from unfamiliar or unauthorized web sites.

› Do a Cost/Benefit Analysis

Small businesses should treat investments in technology like any other business expense — that is, evaluate the costs against the benefits. Be sure to consider the ramifications of your purchases you plan to make. For instance, a software upgrade that needs more RAM and hard drive space may result in having to replace additional components, so you may be better off purchasing new workstations or servers than upgrading them.

› Update Your Technology Plan

Many decisions you make about your business’ technology, such as the choice of your database program, can be costly to change later. That’s why you need a technology plan that takes into account how your business may grow or change. Your technology plan, like your company’s business plan, is a living document that needs to be updated annually.

› Consider Retaining a Technology Consultant

Most small businesses do not have the resources to hire a full-time technology professional who can advise them on their overall technology needs and assist in the planning process. For this reason, you may want to contract with a CPA or another technology consultant who has broad expertise in a number of technical systems and understands the operational needs of your business. He or she is likely to be a critical asset in selecting the right technology for your company and can guide you in its implementation.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at www.vscpa.com.