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How to Cut Tech Costs Acquiring new technology doesn't have to cost an arm and a leg. Save money every time with these tech-buying tips.

By Peter Alexander

Opinions expressed by Entrepreneur contributors are their own.

From health insurance to heating and cooling bills, the cost of doing business is moving in one direction: up. This puts many small-business owners in a pinch, squeezed by limited financial resources on one side and the pressure to keep prices low on the other.

To survive and thrive, it's essential to keep your costs down as much possible. Here's how.

Find a Trusted IT Advisor
When buying a home, a good realtor can save you thousands. A savvy CPA can help cut your taxes. Likewise, a trusted IT advisor can save you money on your technology purchases.

A trusted IT advisor can be a good friend, family member or associate with in-depth technology knowledge. He or she could be a technology reseller. Or perhaps you have someone on staff who handles your IT needs.

The point is this: Find someone you trust who's particularly savvy about technology. Then ask detailed questions.

What particular technology and/or product do they recommend to solve a particular business problem you have? What has been their experience with the technology? What are the pros and cons? How might the technology fit into your business's long-term IT strategy? How does it map to your business's goals? What kind of return on investment can you expect, both short-term and long-term?

This kind of information, coming from someone who understands your business, will help you find the right technology for your needs, helping prevent you from wasting money on the wrong technology or from spending more than necessary. It also helps ensure the tech investments you make today will still serve your needs tomorrow.

Don't have a trusted IT advisor? Find out if there are user groups in your area and attend a meeting. You may find someone knowledgeable who can help. Visit the technology manufacturer's website for a list of value-added resellers or other resources. Some manufacturers maintain online forums for their users to exchange questions and ideas. Another option: Consider hiring an IT consultant. Whenever possible, get advice from someone knowledgeable before you spend your hard-earned money.

Buy Based on Value, Not Just Price
Never buy technology solely on price. Instead, look for value, which comes from a product's overall quality and usefulness in relation to its purchase price.

For example, the lure of a network switch for $99 can be quite compelling. But a low-cost switch may be unable to support your network's future growth. When the time comes, you'll have to toss out the switch and invest in more powerful equipment--and that's a waste of money. You're better off investing in a foundation that supports future growth, rather than investing in cheap, short-term solutions.

In addition to value, it's important to calculate a technology's total cost of ownership (TCO). Purchase price is only one item in the TCO, and it can be one of the smallest costs. In addition to purchase price, TCO usually includes costs for the system design (such as the design of a small-business network); installation; administration and management; training; service and support; the costs of related equipment (such as network cabling) and consumables (such as inkjet cartridges, if you're buying a color inkjet printer); and the costs to upgrade features, increase performance or to add capacity later in order to address projected business growth.

Determining TCO can be a challenge. Here again, a trusted IT advisor can shed light on the total costs of implementing a particular technology.

Carefully Weigh Your Financing Options
As I mentioned earlier, some small businesses buy a technology product on price alone, which is often a mistake. But the reverse--not buying a technology simply because of its price--can be just as counter-productive.

Many of today's sophisticated technologies may seem expensive but can actually save your small business money in the long run. Internet Protocol (IP) communications systems are a great example. An IP communications solution can drastically reduce your business's long-distance and other communications costs. You can save approximately $12,000 annually in long-distance costs and $15,000 in telephone administration costs, thanks to IP communications.

How does a cash-strapped small business acquire technology that might seem out of reach? One option is leasing. Leasing agreements often enable you to pay nothing up front. And you'll have a predictable monthly line-item expense, which helps budget more effectively. Read more about leasing's benefits by reading this article on the pros and cons of leasing tech equipment .

Another option is to outsource. Some technology solutions, such as IP communications and network security, can be handled by what's called a managed service provider. The service provider will design, implement and maintain the technology solution for you. The service provider either hosts the equipment on their premises or supports and maintains the equipment at your site. As with leasing, this arrangement often allows you to conserve cash and provides a predictable line-item expense. And it ensures your technology is up to date and secure for the long term.

A Few More Tips...

  • Make a realistic budget and stick to it. With a budget, you're less likely to spend more than you need to--or more than you have.
  • Consolidate purchases. Sometimes you can get a deal from the vendor or reseller by combining multiple purchases in one transaction.
  • Try before you buy. Whenever possible, test the equipment you plan to acquire before buying. Make sure it meets your expectations and works well in your business's computing infrastructure. This will help prevent you from spending money on equipment that doesn't meet your needs. Also, ensuring equipment works well in your environment before you buy helps reduce time spent on technology support issues later. And for any business, large or small, saving time is saving money.

The Bottom Line
Before you spend any money on new technology, do your research. Ask others about their experiences using the technology you have in mind. Make sure the technology will serve you in the short- and long-term. And above all, never buy on impulse. You've worked too hard to waste your money on a bad technology investment. Instead, make that investment work hard for you.

Peter Alexander is vice president of worldwide commercial marketing at Cisco Systems Inc., the leading supplier of networking equipment and network management for the internet.

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