There’s a time in the life-cycle of every business when the company has to make a critical decision: expand the company, upgrade the technology, or stagnate. This is an age-old problem caused by the combination of increased demand and aging equipment, one that can probably be traced back to the industrial revolution, but today the issue is more pressing than ever. With technology changing and improving more rapidly than ever before, keeping up with your industry is a serious challenge.
How do you know if it’s time to upgrade your equipment? These 3 factors can help you determine what’s at the heart of lagging production and what you should do to address it.
How Old Is Your Tech?
Deciding whether or not to replace your company’s technology tends to depend on what tools your business depends on. Companies that rely primarily on computers, for example, may overextend the technology lifecycle and make their business vulnerable to server crashes and data breaches, but these companies also tend to be better able to make incremental changes. You can run a data migration much more easily and with a lot less downtime than it takes to put in a new production line at a factory.
Technology companies, of course, tend to be under the thumb of innovation – they have to upgrade more frequently than traditional factories in order to keep up with the industry. With a factory, as long as you can keep your equipment in good working order, age may not matter as much. But when systems can no longer function within integrity operating windows (IOWs) your machines could be putting operators in danger. Consistently exceeding IOWs is a clear sign that you need to upgrade your equipment.
What’s The Role Of Speed?
Another factor you need to take into consideration when determining what’s holding your business back is that of speed. Are you tempted to overclock your systems in an attempt to keep up with demand? If investing in new technology would allow you to meet these needs in the same space, then you may be well positioned for equipment financing – after all, it’s expensive to get new machinery.
In some cases, however, new technology isn’t that much faster, even if it’s more precise or produces fewer errors. Or maybe in the past few years, your customer base has expanded to the point that even new technology wouldn’t be able to meet demand. If that’s the case, you’re looking at a situation where what you really need is to expand the whole business, not just upgrade your technology.
What’s Down The Road?
Finally, sometimes your need to upgrade or expand your business in order to prepare for upcoming growth. This is actually the ideal approach; if your asset utilization ratio is maxed out, you’re going to have a really difficult time managing demand during the transition period. It’s preferable to upgrade and expand at a point when you can generate back stock, store it, and then push your growth once operations are back online.
Expansion and upgrading go hand in hand – a highly successful business will have to harness both in order to remain at the top of their field. At the same time, improved technology makes it clear that your business can grow without physically expanding if you have the right tools at your disposal. It’s all about keeping systems in balance and making necessary upgrades before your company hits a crisis point.