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Automation is an undeniable trend that is destined to have a massive impact on businesses in every industry. A lot of people have started discussing the merits and implications of automation in the 21st-century. Democratic presidential hopeful Andrew Yang is one of the most visible figures on this topic. He has recently pledged to offer a $1,000 a month basic income to every American. The basis for his promise is that automation is going to take its toll on the workforce in the near future.
While Yang and many other pundits have talked about the impact of automation on the workforce, fewer have talked about the ways that it is going to shape small businesses. Small businesses around the world are going to experience both positive and negative effects of automation.
Here are some changes business owners should be prepared for. Some experts believe that it will trigger a small business renaissance.
Improved cost-effectiveness
Cost-effectiveness is the number one reason that more businesses are investing in automation. There are a number of ways that automation reduces operating costs.
The most obvious cost-cutting benefit of automation is that it lowers labor costs. When a company invests in new technology, it is able to get a lot more value out of every employee. This means that companies can benefit in one of two ways:
- They can get the same level of productivity out of a smaller number of employees
- They can get more value out of the same number of employees
The route that the company is going to take is going to depend on its biggest priority. If the goal of the company is to scale, then it is going to keep employee headcount the same and extract more productivity out of them via automation. On the other hand, if the goal is to cut costs, then the company is going to start trimming the workforce. Even incremental steps like using report automation tools can achieve this.
Labor costs play a significant role in the company cost structure. Companies that invest in automation can lower costs considerably, which will make it easier to operate on better margins.
Reduce problems caused by human error
Human error is a major cause of problems in most businesses. Even the best employees are inevitably going to make their share of mistakes.
Automation can help minimize the risk of human error. A number of industries have already discovered this. Here are some examples:
- The manufacturing industry has started using automation to replace front line assembly workers with robots. These robots are less likely to mess up when assembling a product.
- Insurance companies have started using software applications to process claims and assist underwriters with creating policies. This has helped minimize the risk of calculation mistakes, which could lead to policies being wrongly denied or premiums being set improperly.
- Healthcare providers have started using automation to help with diagnostics and even certain types of healthcare services. Robots are able to help surgeons with certain procedures, which minimizes the risk of complications. Doctors are more likely to make accurate diagnoses when they have the right technology at their fingertips.
Automation is playing a very important role in boosting the accuracy of business decisions.
Reduce the risk of lawsuits and compliance and costs
Compliance is a major concern for businesses in every industry. Regulators are becoming more zealous in certain areas, such as online privacy protections.
Fortunately, automation is helping businesses in this area as well. They can use new technology to improve outcomes on a number of dimensions. This reduces the risk of certain liabilities, which are likely to draw regulatory scrutiny. The probability that they are going to be fined for failing to meet compliance targets is a lot lower if they are using reliable technology.
By the same token, they are able to use automation to improve service deliverability for customers and minimize customer risks. This is also going to minimize the risk of costly customer lawsuits.
Automation is the forefront of small business in 2019 and beyond
Small businesses in the United States and abroad cannot afford to overlook the importance of automation in the 21st-century. A growing number of businesses are investing in technology to squeeze more value out of their companies and minimize the costs of operating their organization.
