Not too many businesses today can get away without having computers.
However, the success of some businesses can be based on how they view their investment in them. Do they treat them as an asset and take care of them or as an expense and drive them into the ground?
I'm not referring to the accounting treatment of the purchase in this case. Rather, this is about the intangibles that relate to the computers.
THE ASSET APPROACH
Successful businesses recognize the tremendous amount of productivity computers can bring to their staff. Because of that, they invest in optimizing the value of the asset and:
- Have a well thought out computer replacement plan - are the computers cycled out and replaced every 3 years? 4 years? Replacement costs are planned for in advance, not after the computer had croaked.
- Arrange for proper care and maintenance - they are proactive in making sure their security software is up-to-date and routine maintenance and clean-up is done
- Realize that employees can't be productive if they are always waiting on a slow computer or slow internet connection
- Have a solid data backup plan in place that is tested on a regular basis
THE EXPENSE APPROACH
Businesses that take this approach view their computers as more of a "pain in the butt" and...
- Drive their computers into the ground - "it still works, doesn't it?". Too bad it takes 15 minutes for it to boot up, preventing an employee from getting to work each day. Think about how fast 15 minutes of lost time every days adds up over the course of a year. Not to mention that the computer will likely crash at the worst possible time.
- Consider proactive maintenance a waste of money - until they get zapped by a virus which shuts down their computer network for a day or two. How much did that outage really cost them?
- Usually pay little or no attention to their data backup - until their hard drive gets toasted and they realize they just lost all of their critical accounting data.
Which approach do you take in your business?
There are a tremendous amount of hidden costs in the expense approach. These costs may not show up directly in a profit and loss report, but they are out there.
Is it time to rethink your approach?
Share your thoughts and post a comment below...
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Scott Gregory provides CFO and controller services to service, manufacturing and distribution businesses in Northeastern Ohio.
He is very fluent in the following dialects often heard yet rarely understood by business owners:
- "Accounting-speak"
- "IT jargon"
- "Inventory gobbledygook"
- "Banking banter"
- "Internet and e-commerce cyberbabble"
Put his twenty-five years of experience to work in your business.
Contact Scott today.
