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Business Trends - Office in a Box and Cutting Cost (and Cutting Value)

The rapid uptake and saturation of technology in the 21st century has seen the growth of more small business owners. One of the major contributing reasons for this has been the globalization of business from the influence of the Internet. With business now able reach out to potential clients and customers from all over the world, small businesses are becoming easier to operate, because of the larger market share they now have access to, and the key technologies developed simplifying (and automating) the operational activities of the business.

The term SOHO (small office / home office) used to describe the technology savvy and innovative small business owners, but now it seems to be the norm rather than something that is on the cutting edge of business operation. The humble home office used to comprise of the desktop, a modem, and a fax machine. However, with mobile phone and PDA technology vastly improving due to its pervasive use in modern society, we are beginning to see the next phase or trend of business operations beginning to emerge.

The "Office in a Box" generation is hitting the business world as we speak. These days, a mobile phone or PDA has the capacity to handle all your business needs, from using the Internet, making conference calls, word processing, spreadsheet, and even keeping you entertained on those long national or international flights. Software companies are now focusing on research and development of mobile/portable technologies for the mobile phone and PDA, with more and more traditional desktop software now being developed exclusively for this type of market.

The modern business owner chooses where they work, whether it is in the neighbourhood cafe, their favourite park, or out in the sun on their favourite beach. Do you still work in an office, or do you take your office with you wherever you go?

Cutting cost (and cutting value)

There is a very strange trend among businesses operating all over the world to "rationalize resources", and cut "business operating costs". It is true that the emergence of China and Korea as major manufacturing powerhouses has seen the cost of labour drop substantially for many of the major corporation from around the world. It is also true that the choice to outsource selected business operations overseas has seen the cost of labour reduced. However, there are two particular concerns raised by these practices, none of which seem to benefit the business or its employees.

Firstly, the profits made from these (sometimes unscrupulous) practices are seldom passed onto the employees. A clear illustration of this point comes from businesses that claim the need to cut staff numbers or wages, then announces record profits in its next quarterly or half-yearly report. It doesn't take a MBA graduate to understand that although staff wages/salaries comprise of a significant proportion of the operating costs, it is also the workers that generate the bulk of the income for the business. Cutting staff to increase profit works on the short term, and may even please the shareholder, but in the long term reduces worker confidence in management about job security, as well as decreasing the output and productivity for that business.

Secondly, outsourcing business activities (especially core business activities) contribute to the loss of identity for the business, both in terms of its image and its operation. In most cases, not enough is done on the part of the owners to modify business activities, from a service provider to a service broker, therefore both the quality and accountability for their service decrease. This has obvious implications on the image and reputation of the business.

The point is, cut cost, but don't cut value from your business. There are easy gains in the short term, but the ledger will be balance by much more painful losses in the long term.

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