The Cost of Bootstrapping IT
The people that have made the leap into start up / entrepreneurialism all know there is a big difference between want and need. Most know that well designed IT infrastructure and back office business systems are needed to manage risk and support the vision / mission of the venture. Most will say, “We just get by on what we can afford,” believing the time and financial resources need to be focused on the value proposition of the startup.
According to Dunn & Bradstreet eighty to ninety percent of businesses fail in the first five years, so maybe it is a good business decision to bootstrap IT and get by. However, that said, ten to twenty percent survive and presumably become profitable and grow. At some point in a successful business lifecycle, the past bootstrapping and “getting by” catch up with a firm. Bootstrapping begins to add costs or lost opportunities that are easy to overlook. Firms may add a few people each budget cycle as business gets busier than the last year, buy a “tool” to help a siloed part of the business solve a specific process constrain, or even replace some of the out-of-support equipment. These actions make some business owners feel like they are making a fair investment in IT.
One productivity statistic quotes approximately six minutes of lost productivity every time an employee searches for a document. If an office employee searches two to three times a day, and there are a hundred office employees, that equates three full time employees (FTE) of lost efficiency a year. In this example, an IT solution could be put in place for less than the cost of the three FTE’s.
Many C level executives and business owners are shocked to hear that a firm should expect to spend around three percent of top line revenue on IT just to keep the lights on. This increases to nearly 8 percent in years where IT is needed to support growth or strategic initiatives.
The point being, we business owners many times are “tripping over a dollar, to save a dime.” It is possible to save money and enhance quality and operational efficiencies by charting a technology plan to support the business strategy and plan.