For a very long time, large business entities held an insurmountable advantage in terms of resources and would outspend smaller competitors in order to guarantee market domination. This is rapidly changing, however, as digital technologies have greatly lowered the barrier to entry in many business fields and have allowed smaller companies (and even individuals) to successfully compete for a market share. Nevertheless, access to finance remains an important element of any business plan, and many SMOs are struggling to formulate a coherent funding strategy that won’t depend on possession of valuable assets or deposited funds.
Innovation is not limited to technological processes, and new financial services are emerging, with many of them tailor-made for smaller organizations. In fact, small businesses have strong incentives to embrace modernization and adopt one or more of the following novelties.
1. e-Wallets
Over the past decade, PayPal, Skrill, Payoneer, and similar e-wallet services have grown in importance, from simple tools for paying for online orders to legitimate payment methods essential for a wide variety of businesses. By enabling nearly instant money transfers between any two points on the planet, e-wallets are the dynamo of digital business that can greatly accelerate the development of an upstart company. To put it simply, the use of digital wallet services can extend the range of potential clients and allow the freelancer or small entrepreneur to do business remotely. Funds deposited in an e-wallet account can easily be transferred or withdrawn via a bank account from anywhere, which can be very helpful during business trips. Most importantly, this payment method is already becoming widely accepted and, and customers may even expect to have this option at their disposal.
2. Alternative credit lines
Unrestricted access to affordable credit is the only way for companies to invest in necessary equipment and hire additional workers. In some cases, however, it can be difficult to obtain sufficient funds. Traditional banks require a spotless credit history and usually want some collateral, while their approval procedures can be painstakingly slow. The good news is that forward-thinking finance providers offer second chance banking services where the formal requirements are simplified. Alternative credit products remove one of the most frustrating obstacles of starting a business, thus giving them a chance to borrow on their terms, regardless of their past transactions. The additional freedom might occasionally lead to mistakes, but when used wisely it can unlock a whole new lane for reaching additional customers and increasing revenues.
3. Peer-to-peer lending
In the past, sustained growth and infrastructure building was impossible without a seed investment from a major funder. But new opportunities are arising in this area, with microfinance platforms that operate on peer-to-peer basis becoming more popular and maturing into serious funding instruments. By allowing interested supporters to directly fund projects they find promising, this system is basically eliminating the middle-man and facilitating a more efficient and more transparent framework for the financing process.
4. Tax classification software
Taxes represent a big part of the overall expenses for companies that are just starting out, so keeping the amount at the legal minimum is a priority. That’s why such businesses would be well advised to consider using digital tax assistance tools that help classify the expenses and identify more items that are eligible to be deducted. In addition to tax savings, digital tools also allow small business owners to manage their own finances, which eliminates the need to hire professional accountants. Some of the best tools from this group have integrated invoicing and archiving functions, thus effectively acting as a virtual accounting department. However, it’s important to ensure that the chosen software is updated with the latest tax regulations applicable in the given jurisdiction.