From the September 2004 issue of Startups

When you're starting your new business, you have to decide how to allocate your budget. Technology can eat up a significant portion of your startup capital. We're going to look at how you can reduce budget strain and still outfit your office with quality equipment.

Here's an example of what smart shopping can do. Say you decide to buy a 15-inch LCD. Now say you choose a Samsung SyncMaster 152N. Would you rather pay $270 or $434? This isn't a trick question; this is about finding the best deal. And $434 is the price one online store was selling this monitor for recently. A new 152N recently closed at $270 on eBay. Of course, eBay isn't always the answer. Stay tuned as we explore the ways you can get your startup going on a tight budget.

Smart Shopping

Ramon Ray describes himself as a technology evangelist. He runs Smallbiztechnology.com, a technology solutions provider based in New York City, and has learned the ins and outs of technology shopping over the years. He divides technology buying into two halves: new and used. "If you're just starting, I would advise [you] to get new things for your basic office. Get stuff where you have a warranty and it smells fresh out of the box," says Ray. This includes items like desktops, laptops and laser printers.

You can't afford to have a key business hardware component go down without protection. A warranty will give you peace of mind. It's as important to know when not to skimp as it is to know when to go for the extra discount. A CRT monitor may be budget-friendly, but a more expensive LCD may be a better investment when you consider how little space it takes up and the comfort and convenience of having a flat panel.

Discount clubs like Costco and Sam's Club have decent-size technology sections and can net you good value on everything from laptops to printer cartridges. What you won't get is a lot of one-on-one service. If you're sure of what you want, go ahead and look out for good deals. If you need to ask questions, go somewhere else. You can always check prices on their Web sites before you join the club.

Speaking of shopping locally, you can also save money by working closely with a value-added reseller (VAR). This is a good route to explore for large purchases where you want the reseller to also be the installer. The reseller will be up on the latest special offers and promotions that fit your needs. Selecting the right VAR is also important. See how long they have been in business and whether they have experience serving your particular market. The technology needs of a graphic design business can be very different from those of a personal chef service.

Online Orders

Now back to that great bastion of bargains: the Internet. EBay can be a gold mine, but "buyer beware" still applies. EBay is useful if you know what you want, especially if you can narrow down a model number. A few things to watch out for are whether the original documentation is included and whether the warranty is still in effect and transferable. If in doubt, e-mail the seller first.

For some purchases, you can narrow down the seller's location to find someone nearby. That way, you can pick up the product in person and take a look. EBay is a place you probably don't want to go to for your primary computer, but the discounts may outweigh the risks for secondary machines. Items like cords, monitors and peripherals can be had at great savings and little risk if you do your homework first.

Many manufacturers have their own online outlet stores for discontinued and refurbished merchandise. A few notable ones can be found through the clearance section at Delloutlet.com, at the Hewlett-Packard Factory Outlet through HP.com, and at SonyStyle.com. At press time, we found a well-stocked Compaq Presario S5300NX with a 2.5GHz Pentium 4 processor, 512MB RAM, and a 120GB hard drive for $550 at the HP home-office factory outlet.

Chances are, the prices will look good, but the warranties will be lacking. Refurbs are typically only under warranty for a few months at the most. After that, you're on your own. Still, refurbished can be an affordable option for adding a second or third computer to your business. You'll still want a full warranty for your main machine.

You've heard this before, but the most basic piece of advice when buying anything online is to use a credit card. Many shoppers like to start at sites like CNET.com, MySimon.com, or PriceGrabber.com. Using Google's Froogle.com, we looked up prices for a Toshiba Satellite A45 notebook. We found a low price of $1,100 from Costco and a high price of $1,648 from an online retailer called PCRush.com. Most top-tier vendors like Buy.com, CircuitCity.com and others will have similar prices on products.

You can find good deals from smaller online retailers, but check out their reputations first. If you find a particularly attractive price from a retailer you're not familiar with, it's time to proceed with caution. Check out the store's user ratings, and call it if you need to. Watch out for hard sells on accessories and other extras you don't need. This is when the protections offered by credit cards can come in handy.

If some of these tips sound time-consuming, it's because they can be. "The trick is to determine when to spend time shopping and when it's not worth it. If you are looking for an expensive, nonurgent device, then shopping around is a no-brainer," says Rick Buddine, IT consultant and CIO of BIT Corp., a network consulting firm in Orange, California. If you're comfortable with risk and spending time on research, you can save. Others may decide to forgo all that and pay a little more from a retailer they're familiar with.

Part of getting a bargain is knowing what you're looking for. Before you shop, you should have a pretty solid idea of how much power you need in a computer. Suppose you're scouting out a stock notebook with 256MB RAM, but you know you'll be running intensive graphics programs and will need more memory than that. The time to buy that extra memory is right away. You'll get a better deal customizing it online to add another 256MB than trying to buy RAM later and upgrading. The same often goes for adding items like a DVD-RW drive.

Shipping costs can sneak up on you. If you don't need it tomorrow, consider going with a ground shipping method rather than overnight. Extended warranties are frequently offered when you're checking out. Most products won't earn back the cost. You don't need a $50 extended warranty on a $200 PDA. But for some items, you may prefer to have the peace of mind. Laptops, for example, often come standard with a paltry one-year warranty. Extending that to three years can get you safely through until the next upgrade cycle.

Don't underestimate the power of personal ties. When you're on a first-name basis with a salesperson, you can get tips on special offers and sometimes get the heads-up on upcoming sales or price reductions. This may be more common in the brick-and-mortar world, but some online retailers hook up business buyers with one contact who stays with them through all their purchases. CDW.com, for example, sets up buyers with a dedicated account manager and a personalized Web site to track pricing and purchases.

It can be tempting to overspend on the latest and greatest technology to hit the shelf. But unless you're testing cutting-edge video games for a living, chances are, you don't need to heap on the bells and whistles. Don't be afraid of shopping a generation back from the leading edge. An operating system or hardware add-on that has been out for a year has been tested and updated, and that can save you money and grief in the long run.

The trick is to buy a little more power than you think you'll need without going overboard. If you think you can get by with a 40GB hard drive, look into going for 60GB instead. It should be cheaper and less of a hassle than having to upgrade a year down the line.

Saving money on technology goes beyond just the startup phase of your business. Planning ahead during this initial stage can keep your budget on track as you grow and keep you from spending unnecessarily upfront. Keeping your tech up to speed doesn't always require buying new hardware. You can add technology that can make devices a lot more powerful. A $30 software add-on may give you the functionality you need in an older PDA vs. spending $300 for a whole new device.

The technology you choose will keep your new business humming along as you grow. A bit of research and some smart shopping can help stretch even the tightest of budgets. It's your business-it's worth it.

Dial "V" for Value

Want to save a ton on your telephone bills? Hook up with a hosted VoIP provider like Net2Phone or Vonage. It's especially easy for a home office to get started with VoIP. All you need is a reliable broadband connection.

Speaking of broadband, check out some of the Web sites dedicated to helping you find broadband bargains: BroadBandBuyer.com, BroadbandReports.com, BuyTelco.com, and TheConsumerBridge.com. Some of these sites also have user reviews and a host of other information to help you narrow down your options.

The Great Rebate

You buy groceries with coupons, so why not technology, too? Rebates are your friends. But don't count on your local retailer to trumpet all the available rebates.

It's up to you to do a little advance research. Shop online, and check the retailer or manufacturer's Web site for current rebates. Sunday newspaper fliers are good sources for the latest offers as well. Especially if you're buying several items, rebates can quickly add up to hundreds of dollars in savings. Just be sure to save your receipts and fill out the forms carefully.