Photo: Flickr/Cara Photography
A decade ago starting a business was a daunting proposition. Payrolls, accounting, payment systems, supply-chain logistics – setting up all those back-office functions was expensive and time-consuming. Having a conference call required a lot of fancy equipment, and if there was any customer feedback, it came in the form of comment cards. What a difference 10 years makes.Technology has dramatically lightened the load of entrepreneurs, and countless startups have sprung up with low-cost business models that capitalise on the potential of cloud computing, payment systems, mobile web applications, and social-media marketing. And while it is still very tough to get credit, there are some signs the market is beginning to thaw – and a few ways to improve your chances of getting a loan.
Here are seven reasons why getting a business off the ground is easier than ever–and one reason why it’s not.
1. The Cloud Lightens Your Load
Cloud computing is a web service that remotely hosts all the data you can imagine, plus it can offer a myriad of related resources like IT support, or business software that also lives on the cloud. That allows entrepreneurs to get to their information from any device with an Internet connection. It saves money by helping avoid the costs of storing, maintaining, and updating a personal server. In fact, companies can expect to see a 25 to 50 per cent savings in IT costs alone, according to one Microsoft study. And many cloud computing providers like Amazon or Dropbox provide data on how your cloud resources are being utilized, helping you better understand and plan for your company’s needs.
2. You Can Outsource HR
Having even a handful of employees can create a heavy administrative load for a fledgling business. Outsourcing a company’s HR needs – everything from payroll, benefits administration and tax compliance – can not just save time and money, but keep a new business from running afoul of the law. Outsourcing those functions can allow a business to save between 5 per cent and 15 per cent of payroll costs, depending on the company. There are professional employer organisations, or PEOs, like Advantec, that offer a one-stop shop when it comes to handling HR tasks. A good place to get information on companies that do this is the National Association of Professional Employer organisations.
3. Prototypes Are Now DIY
If your business makes a consumer product, you’ll need to design and manufacture a prototype, a scary prospect for many startups. Companies like Ponoko can make your concept into a digital model in a matter of minutes, which they can then produce using a global network of manufacturing facilities. Whether you’re making a mobile app or a designer ring, you can select what materials to use, how many copies you want, and can even come back and make changes. Ponoko’s co-founder, Derek Elley, says they have made more than 100,000 customer-designed products so far. The design files can be housed on Ponoko’s server, allowing just-in-time manufacturing on even the smallest scale. If you’d prefer to have your own 3-D printer that whips up plastic models based on digital drawings, MakerBot Industries sells them for the starting price of $1,300.
4. Apple’s iPad is Your New Virtual Assistant
Rent office space if you want, but these days your office is really wherever you are. The iPad takes that to the next level with a digital AV adaptor that you can connect to a projector or TV for presentations. The iPad’s video capabilities allow you to set up professional video conferences. And all those business cards you get during these meetings? The same video camera can double as a scanner and dump card information into your iPad’s address book, which you can sync to other devices.
5. Apps Can Do Anything You Can’t Do
There’s almost nothing apps can’t help you do, but some are better than others. Wufoo, for example, helps you create documents like order forms, online surveys, and employment applications, all without knowing a lick of html. Another great app, GoToMeeting, allows you to do everything from simple video conferencing to live interactive training. And if you need to take payments, apps like Square turn your iPhone into a credit card machine. Google Wallet takes this a step further: The app not only allows people to turn their phone into a credit card, but business owners can use that connection to offer up loyalty programs and coupons to customers via their cell phones. The bad news? For now, it’s only compatible with Nexus S4G on the Sprint network.
6. You Can Geo-Target Your Customers
The most recent Merchant Confidence Index found that Facebook ads are among the best way of getting to the locals because they offer location-based marketing. Google’s Small Business Network also offers Google Adwords, which means when someone Googles using one of your keywords, your ad can appear next to the search results. These services allow you to more easily scale your ad buys as your business grows, track exactly where customers are coming from, and in most cases spend far less money than you would on a traditional media ad.
7. Google Alert Your Way to a Better Customer Experience
Customers may not always tell you directly that they didn’t like your product or service, but they rarely hesitate to write a nasty review online. You can set up Google Alerts to e-mail you every time someone mentions keywords, like your company’s name. Nothing says you take your business seriously like addressing a customer’s complaint directly.
But You’ll Still Need Credit to Get Started
Although those seven reasons make it cheaper than ever to start up a company, it’s still tough to get credit. Small business lending dropped 8.3 per cent between 2008 and 2010, according to the Small Business Administration. But there are signs that the credit crunch is easing, and there are things you can do to better your chances. Penny Pickett, associate administrator for entrepreneurial development at SBA says anyone who plans to start a business needs to do their homework before applying for a loan; lenders say 60 to 70 per cent of loans are turned down because the application package was not properly prepared, the business proposal was not well thought out, or the person didn’t have a relationship with a bank. Pickett suggests would-be entrepreneurs attend one of SBA’s business development centres where mentors can help them devise a business plan and learn in detail what it will take to run a specific business. She adds that when prospective business owners receive at least five hours of counseling, SBA has seen significant improvement in access to capital.
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