smallbusiness.co.uk: Helping your business think big

As a small business, investment in IT should be a priority, as it can give you access to a greater reach of customers and suppliers, and help you to run your business in a more efficient manner. And if your business is to grow, it’s important to plan an IT strategy from the start.

Buy only what you need

Decide what you want a computer to do. You could use it for word-processing, for your accounts, to help you record databases, for selling or for research purposes, depending on the particular needs of your business. Don’t be swayed into buying additional features unless they are relevant to your business.

If you are looking to develop a web presence, decide whether it will simply be an online brochure or more interactive, whether you will be using it for marketing purposes or for e-commerce. The bottom line is that it’s about return on investment.

It’s important that you budget carefully, so what can you expect to pay? According to Pita Harris, commercial director of Oxford Knowledge, which provides IT and knowledge management solutions for small businesses, a good-quality work-station with basic software will set you back around Ł800. But you will also need to factor in costs for a server, firewall and printer and you will also need to choose an operating system.

“Windows is the most common system, but Mac OS is widely used too. You could consider Linux, which offers a cheaper hardware and operating system, but there is less support available for this system than for others,” advises Harris.

Invest in good products from the start

Whichever system you choose, it’s important to invest in a robust one. A good PC will not cost you a fortune but you get what you pay for, so buy the best products that you can afford and choose a supplier that has an established user-base. If you don’t get new software, bear in mind that things can start to run down, like a car and this could end up costing you more in the long-term.

Always weigh up the pros and cons of using a particular service against the needs of your business. For example, you could set up your business without a central server system, but then it will be harder to manage files and control viruses.

Take advantage of tax breaks

Don’t forget that tax allowances in this year’s Budget mean that you can claim back much of your investment in IT. Small businesses are entitled to claim 100% first year allowances on investments in Information Communication Technology (ICT) until the end of March 2004. This means that capital expenditure can be written off against profits for tax purposes in the year of purchase.

According to the Inland Revenue, the following can qualify for 100% first-year capital allowances.

- computers, from large systems down to palmtop organisers, and parts of computers such as new memory chips

- computer peripherals, such as keyboards, scanners and printers

- computer cabling and dedicated electrical supply systems for computers

You can also claim on all computer software, and on the costs of buying or developing a website, as long as it is set up for your business. To qualify as a small business, your annual turnover should not be more than Ł2.8 million, and you should have assets of not more than Ł1.4 million and no more than 50 employees. To find out more and to see whether you are eligible, visit the Inland Revenue site.

Plan for the future

Whatever your IT needs are, it’s important to build a strategy that will fit in with the future plans of your business. Consider the following so that you can plan your technology around the future needs of your business.

- How fast do you expect the company to grow?

- Will more than one person be using the equipment?

- Consider the direct and indirect costs and benefits related to the purchase of any IT component

- Remember that costs can also include things such as service and support, networking, security, user training and software licensing, but ensure you check exactly what you are getting

(3/7/2003)

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