While small businesses are the backbone of the economy and job creation, they face quite a few struggles. According to Forbes, two major ones are unwillingness to secure funding and resistance to technological know-how. For instance, IoT application development services is just the thing that can tremendously improve business cash flow and potentially open new revenue streams while requiring some upfront investment. According to RT insights, 92% of IoT use cases end up reporting positive ROI. With that in mind, Dimitrios Paraskevopoulos, Senior Analyst at IoT Analytics, says: “It’s high time the discussions shift … to ‘how can we leverage the technology to improve our operations, supply chain, and products’.”
In this post, we’ll discuss why IoT investing should be the next step in your startup.
Reasons to Invest in IoT Development
Does your startup experience effort-consuming repetitive tasks that keep your staff away from engaging with customers and upselling? Have you had an unexpected equipment breakdown damaging your balance sheets for that quarter? Is there a situation where something eats up more money in operations than it should? Investing in IoT is driven by three key use cases:
1. Automating tasks;
2. Predictive maintenance;
3. Real-time monitoring.
Investing in IoT is often reasoned largely by cost-savings and the potential of new revenue streams.
Companies investing in IoT can range from a bakery to a large warehouse to a large enterprise. Focusing on startups though, let’s imagine opening a bakery. Bakeries often experience spoilage, they are expected to not always optimally use resources, and when equipment breaks down, they might lose revenues due to not producing the goods for sale with the addition of repair costs. IoT application development can generate savings depending on the scale, but it can be around 40% for spoilage, 10% for resource optimization, and repair costs at around 50% plus a loss of revenue due to equipment breakdown. Often, the business will move into positive ROI after the first six months to a year and a half. For startups, by investing in IoT companies can enable scaling, and instead of 1 location, a startup might choose to open 5 shortly.
Businesses that have scale will achieve positive ROI faster. However, a smaller business will unlock the potential for scaling as one of the reasons of investing in the IoT.
How to Start Your IoT Project?
To start, it is imperative to identify your business goals, such as what benefits you can generate from leveraging IoT technology. By working with Internet of Things companies, you should identify expected benefits and costs to calculate the ROI, as in the table below.
Bakery with 5 locations IoT Investment & ROI Breakdown
| Category | Details | Annual Savings / Revenue Impact |
| Investment Costs | IoT app development | $20,000 (one-time) |
| IoT hardware (sensors, setup) | $6,000 (one-time) | |
| Cloud infrastructure & maintenance | $3,000/year | |
| Ingredient Waste Reduction | Prevents 40% of spoilage ($500/month per location) | $12,000/year |
| Energy Cost Reduction | 10% savings on electricity bills ($1,000/month per location) | $6,000/year |
| Predictive Maintenance | Fewer emergency repairs (50% reduction) | $1,500/year |
| Avoided revenue loss from downtime ($800/day × 5 major breakdowns) | $4,000/year | |
| Total First-Year Benefit | Ingredient + Energy + Maintenance Savings | $23,500/year |
| Total First-Year Investment | App + Hardware + Cloud Maintenance | $29,000 |
| ROI (Year 1) | (Savings – Cost) / Cost → ($23,500 – $29,000) / $29,000 | -19% (Loss in Year 1) |
| ROI (Year 2 & Beyond) | Ongoing cost: $3,000, Annual Benefit: $23,500 | 683% profit |
These calculations demonstrate that companies investing in IoT are bound to generate substantial ROI, and it is only a matter of time. Furthermore, if your startup today can start freeing up $23,500 a year, you will be able to grow it much faster.
Calculations for IoT application development are best done with a professional IoT development company. They can help to calculate the benefits realistically as well as select the best IoT setup in terms of your budget. The capabilities of IoT systems have changed drastically over the past few years. Things achievable with 50 sensors a few years ago are now achievable with just 5. Edge computing allows data preprocessing and decreases cloud computing costs. This is why the cost side can be greatly reduced to achieve positive ROI for your business faster.
Here is a set of trends that makes today’s IoT systems more compact, performant, and cost-efficient
IoT System Development and Application Steps
IoT system development is defined as a process of architecting, implementing, and launching an interconnected network of sensors and smart devices coupled with software. IoT development services include 5 core steps:
- Architecting the hardware solution: placing and connecting sensors, actuators, and smart devices;
- Developing the app: creating software that will receive data, visualize via a dashboard, and enable analytics.
- Networking: connecting sensors and software via Wi-Fi, Bluetooth, LPWAN, or cellular network.
- Edge computing & cloud: taking care of data processing and analysis first on edge, and then storing results in the cloud.
- Security & Scale: data protection is imperative in IoT and edge computing is one of the game-changers that allowed IoT companies to significantly reduce security concerns.