Businesses have heard a lot of promises from the technology world over the years, ultimately underwhelming users. Unlike magic tools offered by traveling salesmen reminiscent of the old western magic fix-all elixir seller, the Internet-of Things (IoT) has shown itself to be a very real and practical benefit for nimble bootstrap small businesses and the enterprise alike. However, the Internet of Things has given small businesses and startups an advantage over larger competitors that are living with the sunk costs of legacy infrastructure investments.
How Can a Small Business Benefit from the Internet of Things?
The first big benefit is the ability to connect to technology remotely and cheaply, using the Internet as the default network. The Internet of Things is a game changer for all businesses with three clear benefits:
- An opportunity to reduce operating costs and equipment expenses
- An ability to increase productivity over the same dollar spent in function
- A gateway towards new markets and new product avenues
These benefits across industries can turn into big exchanges, with some estimates putting the potential income from the investment in IoT expenditures well into the hundreds of billions of dollars by 2020. However, for small businesses it can be far more fundamental; the difference can be the ability to survive and grow versus struggle then disappear in a less than a year when compared to the investment of cash that was typically put down in the past by large businesses to produce the same type of functionality.
What is the Internet of Things?
Unfortunately, the Internet of Things suffers from a severe buzzword syndrome. In short, IoT is literally being able to live and function, consume and control technology leveraging the Internet, Wi-Fi and cellular networks instead of a dedicated network. IoT provides access to virtually any device that can connect to the Internet – anywhere in the world. So the same vehicle that one uses to remotely control the locks on an office door through your mobile device is the same channel an enterprise uses to conduct their operations.
A Series of Sensors in Everyday Objects Connected to the Internet
So now we have a basic idea of what the IoT is, but it goes much further. Typically, many think the IoT involves a computer to make everything happen. But taking things a step further, anything that needs to be measured or monitored can also be connected and read remotely. It’s simply a matter of taking the sensor and connecting it to the Internet and then connecting software that goes and reads that information off of an Internet signal from the sensor. The most obvious example is an alarm monitoring system. Normally, a small business would have to pay for a closed-circuit installation and camera equipment to connect every sensor and camera. Now, with the IoT approach, everything is connected to a Wi-Fi router connected to an Internet access. From there, and with each item working with a functional IP address, every device can be read and controlled via that same Internet access. The operational expense is a fraction the cost of the traditional alarm system. This same approach can be applied via IoT to any other integrated sensor/communication system with the right equipment.
Devices That Automatically Transmit Data in Live Time
Global Position Sensing or GPS is the next major advantage reached with IoT. For a company that doesn’t have a lot of employees but needs to track a lot of things geographically, GPS is half the battle. Combine GPS with Internet capable equipment, and now the business has both the ability to capture data as well where it is coming from regionally on a map. Visually displaying all this information not only enhances decision-makers’ ability to “see” where it’s coming from, it also allows the business to see the data as it is occurring as well. This opens up huge product or service opportunities for small businesses once reserved for companies with far more equipment and staff. It also creates avenues for small businesses to find niches that help bigger organizations.
For example, Bigbelly figured out how to create both a mappable system and capacity sensing capture approach for garbage cans. Doing so, they helped trash collector businesses and agencies become far more efficient, picking up only those trash cans full versus wasting trips on cans that were only half full. The ramifications of this approach become obvious, especially when transportation costs are best spent on full efficiency. In a place like New York City the efficiencies can mean millions of dollars in saved labor time, lower payrolls costs, and lower vehicle maintenance.
Why the Internet of Things is Not Only Beneficial for Big Business
The simple fact that the Internet is free or easy to access for low cost literally puts a wide area network tool in the hands of much smaller businesses without the expense of constructing that WAN. And given how easy it is to cobble together various services connected to the Internet, a small business literally has every resource available to a Fortune 500 company at its own fingertips. It’s just a matter of thinking like a construction foreman and understanding how all the pieces fit together the right way.
Cloud Based Services Reduce Initial Investment Required to Utilize
The scalability benefit of cloud services makes solutions through the IoT even more affordable. Small businesses get the software solution they want for a relatively low price based on exact usage and when it’s needed. Instead of thousands of dollars in sunk costs, the business only has a charge for the tools it needs at a given moment with as many connections as needed at the time. So when a project is over and scaling down, the rate changes and costs are avoided. Try doing that with a sunken network investment and purchased software.
Small Business is Often More Nimble and Able to Adapt to Change Easier
The final and most fundamental benefit of the IoT environment is how it enhances a small business' ability to be flexible and nimble. This is most evident with business-to-business outfits that need to scale up fast and then trim down from client to client. The cloud and IoT tools make flexibility a natural function of the business, enhancing its ability to move from one opportunity to the next without the need for expensive infrastructure. The company focuses instead of delivery and profit instead of raising capital to fund high operating costs.
Service Providers Create Uses for the Internet of Things Suitable for All Business Sizes
As an inherent beauty of the IoT approach, many of the tools available from service provides are scalable. This means that providers can match the needs of Fortune 500 companies as well as itty-bitty micro-businesses getting started with a bootstrap bank account. And everyone served gets the same quality tool with the same capabilities, same capacity, and same functional performance. While for big clients there is at least a minimum expectation of delivery, for the small guy the side benefits of scalable providers is huge. And the best part is that the small guy only pays for exactly what is needed; there are no sunk costs which usually otherwise eat up huge amounts of extremely valuable capital.
Small Business Can Benefit from Using the Internet of Things in the Following Ways:
Aside from scalability, however, there are other big advantages that the IoT universe hands off to small businesses or that they should be taking full advantage of when possible. These include everything from running their operations with the same level of professionalism as a fully-staffed corporation to logistical outsourcing so coordinated it’s as if the business owner has 1,000 people employed.
Increased Efficiency of Existing Production or Supply Chains
One of the biggest challenges for small businesses is being able to increase productivity. They often feel tied down by the need for direct labor, and since payroll often ends up being a huge portion of operational costs, the staff they can afford limits many small businesses. Interestingly, however, the IoT universe allows small businesses to automate their production and supply chains for far greater output per human player involved. Whether the advantage is through security, logistics, routing of materials, facility management, or even physical goods movement, in theory the IoT can make almost every function handled by a human possible with a digital helper instead. And all of it can be controlled from a single laptop or computer if necessary. Of course, these ultra tech factory worlds are extreme, but with the right engineering what was 10 years ago impossible is now very possible and easily networked over the Internet.
Faster Access to Useful Data for the Business
Let’s not forget, most small businesses focus on the service side of the market versus manufacturing. And that means data and information are premium. However, if the small business must rely on expensive humans left and right, the very resource doing the work can be the biggest hindrance to getting information timely. People become the bottleneck. Replace their roles were possible with automation and IoT tools to free up people from mundane data collection, and the small business can realign its people in high productivity versus mediocre have-to-do tasks. The difference can be amazing and literally propels a business through multiple evolutionary jumps of growth all at once.
Reduced Costs by Minimizing Waste and Maximizing Efficiency
Another big breakthrough for small businesses happens on the financial side. Payroll savings and avoided capital expenses have already been mentioned above, but that’s not the only money saved. Waste and materials loss happens on the natural. And it builds up over time. Small businesses usually can’t avoid the charges because they seem necessary to realize the big activities critical for revenue generation. The loss can be in the form of fuel, energy, utilities, travel, fees, and more. With the IoT in play, miscellaneous expenses that represent as much a 10 to 20 percent of a small business’ budget can begin to shrink dramatically. Just think about how much money is saved in vehicle fuel alone if one doesn’t have to run around from location to location to check on processes and activity. That’s the kind of funds that can be redirected into more critical expenses that produce new income versus being necessary cost losses.
Using the Internet of Things to Offer a Different Range of Products or Services Themselves
Finally, because small business doesn’t have to be tied up with the logistics and sunk cost necessities of above, they have far more ability to be diverse in services. Again, being freed from activities locked into a ratio of required personnel being present allows activities to occur via equipment controlled remotely. Freed up funds from automation allows small business to reinvest more and create more products and services for customers, offering a more robust delivery to the market and diversifying their market base far more. That in turn creates more stability and increases the chance of business long-term success. And most notably equipment being able to gather and transfer data and information far more accurately and automatically gives small business far more information to work with, improving their operations overall and around the clock.