Leveraging the Internet
There are many ways your new, small business can leverage the Internet during your startup phase.
In addition to the traditional methods of funding your startup, crowdfunding may be a viable option. You've likely heard of famous crowdfunding sites such as Kickstarter and Indiegogo. With crowdfunding, you raise funds by collecting small donations from a large number of people. In other words, instead of obtaining large sums of money from big investors, you obtain funding via a large number of small investors.
There are three types of crowdfunding:
- Donation-based crowdfunding. In this type of crowdfunding, individual small investors receive rewards that are typically tiered toward the donation level. Rewards can range from the finished product your company expects to produce once funded to a simple acknowledgment on an online donor page.
- Equity crowdfunding. As its name indicates, with equity crowdfunding each individual receives equity shares in your company.
- Debt-based crowdfunding. A debt-based crowdfunding campaign offers its investors the future return of their investment with interest.
The type of platform you use for your crowdfunding program depends on the type of crowdfunding you want to use. Popular crowdfunding sites such as Kickstarter and Indiegogo offer donation-based crowdfunding platforms. Crowdfunding sites such as Crowdfunder provide equity crowdfunding while others, like Prosper, offer debt-based crowdfunding solutions. Features will vary among these sites, so if you decide to go the crowdfunding route, it's important to take the time to research specific crowdfunding platforms to see which is the most suitable for your company.
When raising funds through crowdfunding, tax implications must also be considered. In most cases, the money you raise through crowdfunding will be considered income, but in some cases it may be considered a non-taxable gift. Sales tax may also be an issue, depending on where your company is located. It's always best to consult with a tax expert who can best advise you how these tax issues might affect your company.
Mobile Payment Processing Services
Obtaining credit card processing services from a bank can be challenging and expensive, requiring you to set up a merchant account, purchase or lease an expensive credit card reader, pay setup fees and continuing monthly fees, and then pay an additional per transaction fee. For a business just starting out, the costs can be exorbitant.
A number of payment processing services have arisen which utilize mobile devices to offer small companies an alternative to these traditional bank services. Most of these services provide customers with one free card reader, which can provide a substantial initial savings to the small startup.
Square is currently the best known of these mobile payment processing services, but there are many others which offer similar services. It's important to research the alternative payment processing services that are available, as the range of features and fees will differ from service to service. For example, some services require monthly fees while others offer a pay-as-you-go structure. There are also annual fees, discount rates and per transaction fees which should be considered, as these can affect your overall costs substantially.
Web-based Point of Sale Systems
If your startup is a retailer, you'll have to invest in a point of sale (POS) system for customer checkout and inventory management purposes. Traditional POS systems are typically quite costly to install and require regular IT software/hardware maintenance. Because a web-based POS system is cloud-based, the initial upfront costs tend to be cheaper and there is far less of an IT maintenance burden.
It's important to thoroughly research the various web-based POS options available. In addition to the lower costs and reduced IT burden, different POS systems offer different additional features. Some systems, for example, offer mobile checkout solutions, which may be beneficial if you intend to conduct sales at off-site locations. Other features you will want to look into include e-commerce modules which allow you to offer your customers online shopping, and social media integration to allow for enhanced online connection with your customers.
Regardless of the industry you are in, you will need to have a company website. An online presence provides opportunities for today's connected consumer to find you.
Before your website gets built, you will need to have a domain name. Purchasing a domain name is easy, and can be done through any domain name registration company. When purchasing a domain name, it's helpful to have a list of alternative names on hand, in case the one you want is not available.
Setting up a company website may seem like a daunting proposition, but it's not something you have to do on your own. There are a vast number of website design companies and freelance website designers who can do the job for you. Fees are not the only part of the research process when it comes to finding the right company or designer. Most website design companies and freelance designers will have an online portfolio showcasing previous work they've done. Choose one whose style fits your ideas about the type of company website you want.