A while back, I blogged about a problem I see in Robert Gordon’s wonderful book, “The Rise and Fall of American Growth.” Now, don’t get me wrong. I love the book and applaud Professor Gordon for his historical research.
But I understand Gordon to suggest that technology—specifically what he calls Information and Communication Technology or ICT—has largely delivered the big benefits to our economy at this point. More specifically, Gordon reads the macroeconomic tea leaves and sees ICT’s impact as largely made by 2004 or 2007.
In my little post earlier, I mentioned three examples of ICT that have greatly impacted my small business since Gordon’s cut-off date. But in retrospect, using only three examples to make my point was inadequate. Another CPA, for example, looked at post and then privately reached out to me and assessed the benefits of technologies I mentioned as “de minimis”… as, in effect, nibbling around the edges.
So I want to list here in laundry list fashion the eleven most impactful ICT changes (Remember, ICT stands for “Information and Communication Technology”) that we’ve implemented in our CPA firm since that 2004-ish cutoff date. I’m not going to go into great depth about any of this stuff. What I want to do is give you a broad brushstrokes picture of the sorts of ICT changes we’ve made. The changes appropriate for your small business will surely look different. But what we’ve had good success with might give you good ideas for your situation.
And a note: Other than as a customer of the products mentioned below, I’m not earning any sort of commission or backdoor compensation from mentioning these products.
Profit Building Technology #1: Niche Topical Websites for Targeted Marketing
Now traffic has ebbed and flowed over the last ten years. And the sites require continued effort to keep current with tax law and technology. But even after a decade, the sites market niche CPA firm services to maybe 100,000 small business entrepreneurs annually.
By the way? Probably the key bits of enabling ICT that we used for the niche websites were low-cost web hosting from www.godaddy.com and then super-economical offshore web designers we connected with via www.elance.com.
Just to put the costs in context, I think I can spend more money going out for Mexican food on the weekend than it costs to host a website at GoDaddy for a year or than it costs to pay an offshore web designer to design and publish a website like our S Corporations Explained site.
Profit Building Technology #2: Digital Products to Expand the Menu
Another ICT-based innovation flows from those topical websites: A small CPA firm obviously can’t serve tens of thousands of corporate clients a year… but once we had all that traffic from the niche websites, we were able to publish (successfully) e-books and do-it-yourself kits that helped thousands of entrepreneurs and investors incorporate or form an LLC.
In effect, combining a handful of simple ICT tools, including our niche websites, the www.paypal.com electronic payment system, and pdf files with digital rights management features enabled, let us deliver a whole new product category.
Note: I think we give up a couple of percent of the sales price to PayPal when we sell digital products. But that’s the only incremental cost.
Profit Building Technology #3: Electronic Delivery Systems to Provide Scale
Initially, and I know this was crazy, we delivered our e-books and do-it-yourself kits manually. (I know, I know… how stupid was that…)
After a short bit of trial and error, we moved to www.e-junkie.com, which completely automated our order fulfillment and also provided for some simple reporting. Cost? Maybe $50 a month?
And just to make a quick important point: The E-Junkie system proved itself massively scalable. We’ve at points published very hot products, and found E-Junkie successfully handling 50 to 100 transactions an hour.
Profit Building Technology #4: Paperless Document Management to Save on Storage Costs
I’ve mentioned this ICT before, but we don’t work with paper in our CPA firm. We either get digital source documents or convert paper documents to digital documents before we begin work.
Going paperless nearly zeros out our document storage costs. The actual cost of the Intuit Document Management System—that’s its name—costs only a few hundred bucks a year. And given we used to spend in effect thousands of dollars a year renting extra space for storage, this technology delivers a high return on investment.
Profit Building Technology #5: Optical Character Recognition to Save Labor
The optical character recognition software has become good enough in recent years to read most tax forms. You need two to three thousand dollars of hardware and software (and a paperless document management system in place) to use this optical character recognition capability. But done right, this ICT means a small firm can probably skip hiring seasonal data entry clerks—a change that saves $10,000 to $20,000 a year. And a larger firm might replace two or three seasonal data entry people with a single worker who scans paper documents into the paperless document management system.
Note: We use several products to do lots of time-saving optical character recognition: Because we use Intuit’s Lacerte tax software, we use Intuit’s Scan and Import software to read tax forms and rather successfully input this information into many returns. We also use the Abbyy finereader product to convert pdfs into Excel workbooks, which make accounting easy. As mentioned, we have high-speed scanners. We need to pay for new software every year, predictably. The high-speed scanners one needs last for a few years.
Profit Building Technology #6: Portal for Document Shipping and Receiving to Increase Capacity
Another ICT we’ve talked about before: We use Citrix’s Sharefile product to let clients electronically deliver their documents and accounting records and to “ship” tax returns and accounting records back to clients.
Sharefile costs about $100 a month. Accordingly, we probably earn an absurdly generous return on our investment considering just our postage, paper and toner savings. Actually, no wait, let me change that. I think we get a generous return on our investment simply by saving on postage.
However, the real benefit of using a portal to move documents around is this: We get a super-fast way to move stuff into the tax accountants’ hands at the beginning of the return preparation process and to move finished returns back to the client at the end of the process.
The benefit of these extra days is subtle. But, in effect, we get five to ten extra days in our tax season. That noticeably bumps our capacity.
Maybe a metaphor better highlights the benefits of these extra days. A CPA firm getting five or ten extra days during tax season has basically the same effect as a restaurant finding itself with an extra five or ten tables to seat patrons during the busiest days of the year. Or like a hotel finding itself with five or ten extra suites it can rent on the busiest nights of the year.
Profit Building Technology #7: Blogging as a Client Service Activity
A quick remark about this blog… While it provides another platform to market our CPA’s services and then also our digital products—and it’s effective for that—it also provides a great way to supply “always on” customer service at low cost.
Specifically, the blog provides a way to answer common client questions with polished answers.
We’ve got lots of stuff at the blog about cleaning up QuickBooks errors, for example. And lots of stuff about how to handle simple small business payroll questions.
Further, the blog provides another way to socially connect with clients.
The cost to all this? We pay $10 a month for a WordPress add-on we use at our site to help with spam. And then at the start, we also paid about $100 for a WordPress “theme,” which is a canned design for a WordPress blog.
Profit Building Technology #8: Craigslist for Hiring
Another technology we’ve used with high impact in recent years: Craigslist.org for hiring.
I know, not what you’d expect, right?
But we’ve tried the niche and more prestigious web recruiting and hiring options. And we’ve advertised in the few remaining professional publications. But we get way, way better results using craigslist.
The craziest part of all this? At roughly $50 a posting, Craiglist costs maybe 10% of what the “high end” web-based hiring alternatives cost.
Profit Building Technology #9: Virtual Receptionist to Save Costs
We’ve been very happy with our Ring Central phone system, which provides a virtual receptionist also known as a robo-receptionist. The system does a workman-like job at handling incoming calls and at taking and passing on messages.
A surprise here: Though RingCentral of course costs money to use, the “marginal” cost changing from our old land-lines-based system to our new RingCentral phone system was negative. In other words, we actually saved on our telephone expenses by moving to RingCentral (about $100 a month or so).
But the big benefit of this VoIP phone system (VoIP stands for voice over internet protocol) is that it’s meant we no longer need a receptionist to handle the phones. That’s been a huge deal for us. Giving our administrative support workers one less ball to juggle in the air makes everyone’s jobs less stressful and more enjoyable.
Profit Building Technology #10: Fiverr.com Offshore Designers
Another ICT-derived change to mention: The outsourcing platforms like Fiverr.com have changed the way we budget for and buy specialty services like graphic design for our advertising.
A decade or two ago, if you wanted a graphic designer to do the cover for a brochure or book or to create an advertisement, you might pay, well, maybe thousands and probably always many hundreds of dollars. (Back when I wrote books for the big book publishers, those publishers were often paying $3,000 simply for a book cover design.)
Today, outsourcing platforms like Fiverr make it easy to outsource small projects to specialists from around the world. That banner ad for our CPA firm in the upper left cover of this page? That cost $25. And sure, it’s maybe not going to win any awards from Advertising Today, but for $25? That’s a great deal.
Profit Building Technology #11: Cloud-based Accounting Like QuickBooks Online
One final ICT-derived change to mention: We have found the cloud-based accounting solution, QuickBooks Online, a powerful way to more economically serve small business clients who need help with their accounting systems. But to understand why this change is massive, I need to note that before QuickBooks Online, no good economical way existing to help a client economically deal with tricky accounting problems they encountered on a random basis.
About the best option available was to drive over to their offices, do the five or ten or thirty minutes of work. And then drive back. Nobody was happy with this arrangement.
With QuickBooks Online, the process works much simpler. We’re always only a click away from helping some client fix an erroneous entry. Or from showing a client how to record some tricky transaction.
A Final Comment
Let me suggest again something I said at the beginning: Technology provides small businesses with tons of powerful new tools to dramatically bump revenues, cut costs, and meaningfully boost profits.
What works in your specific situation will surely differ from what’s worked in mine. But you want to keep a close eye out for the opportunities that technology offers your small business.