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the changing landscape of small business finances

What is Changing Small Business Finances?

Cloud computing, telecommuting, blogging, and e-commerce have revolutionized numerous industries and age-old business practices. For instance, cashless payment solutions have completely redefined the way consumers purchase goods and services, as well as the processing of financial transactions. Below is a look at the changing landscape of small business finances.

Generating Funds

In 2009, crowdfunding efforts managed to raise only $530 million. In 2014, however, that figure topped the $10 billion mark. According to a Forbes report, crowdfunding is likely to grow even bigger in the near future. In fact, figures published by Massolution, a research and advisory firm that specializes in crowdsourcing solutions, suggests the crowdfunding industry will surpass the venture capital industry in terms of funds raised in 2016. These figures show that crowdfunding has matured into a reliable source of business financing.

Moreover, crowdfunding allows small to medium sized businesses to raise much-needed capital faster than it would take to acquire financing from a bank. For instance, figures from the crowdfunding platform Kickstarter show that Pebble, maker of Pebble smart watches, hit the $1 million mark within 49 minutes of launching a financing campaign related to the Pebble Time. A week later, Pebble had raised $13.3 million. Eventually, Pebble closed its crowdfunding campaign after raising $20.3 million. Take note Pebble’s initial goal was to raise $500,000. If Pebble had gone for a bank loan, it would probably have taken months to access the $13.3 million raised during the first week.

Customer Transactions

Mobile payment apps and online wallets are giving traditional credit cards a run for their money. Venmo, for example, has become synonymous with cashless payments, processing up to 10 million transactions and growing at a rate of 30% per month. According to a Bloomberg post, Venmo’s popularity with millennials (born between 1980 and 2000) propelled it to process mobile payments worth $314 in the first quarter of 2015. In general, the young tend to adopt cashless payment solutions such as Venmo faster than other age demographics because they are generally more tech savvy. For this reason, a small business must study its target market carefully including such vital aspects as spending patterns, age and shopping frequency.

Paying Employees

Many small businesses have jumped on the telecommuting and outsourcing bandwagon for various reasons. One reason is that this “bandwagon” can cut office space and hiring costs. A study carried out by a Stanford University economics professor and Ctrip, one of China’s largest travel agencies, found that, on average, telecommuting reduced office space expenses by $2,000 a year per employee while increasing productivity 20% – 30%. Secondly, home-based workers can tolerate longer working hours compared to office-based employees (9.5% longer, according to a New York Times). Moreover, telecommuters can be 13% more productive than non-telecommuters, according to the New York Times. Also, businesses that have adopted telecommuting and outsourcing typically use cashless payments technologies to pay their remote workers.

Businesses Entirely Online

Today, it is possible to set up many types of businesses online and run them from the comfort of your home avoiding the costs, hassles, and limitations of a physical storefront or office space.

Thanks to technologies such as web hosting, cloud computing, broadband Internet and cashless payments, virtually anyone can start an online business at a fraction of the cost required by the more traditional startup.

Plus, with the changing landscape of small businesses finances even funding limitations have been greatly diminished. So, why not get started today!?!

About the Author

Ryan Ayers is a self described: Husband. Marketing Manager and Contributor for A Real Online Degree. Freelance writer on the side. Lover of all things related to business, technology, innovation, and the LA Clippers. Feel free to reach out to him on Twitter (@TheBizTechGuru) or LinkedIn.

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Obviously, there are no guarantees of success; however, if you do the above, your chances for success are improved.

If you are considering launching a business or already have, check out Dear Mr. A for creating strategy around your passions. The Next Level Navigator strategy process is a great crowdfunding tool! Click here to look inside Dear Mr. A.

Why not tell us about your own changing financial landscape experiences and how you are doing? Please do so, either in the comments below, or by submitting a guest post to us. We review these posts carefully, and as long as your contribution adds something to the entrepreneurial community we’d be happy to feature it on our site with a link back to yours!

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