It used to be the case that starting up a business was expensive. You had to go out and buy some physical capital if you wanted to start a car plant or a workshop. But today, the costs of setting up most businesses are relatively small. Yes, there are development costs involved, but many of the things that were once money drains are no longer.
Take websites, for instance. Once upon a time, starting a website could cost tens of thousands of dollars. Now, the average startup can do it for free and get something much better out of the other end, thanks to website builders. And what about accounting? If not money, then it used to cost a lot of time to do one’s accounts. Some estimates from the US suggested that as much as two weeks a year are spent by the average businessman just preparing payroll and taxes. But with the wave of new digital technologies and apps, that’s all come to an end, and accounting costs have more than halved.
Then there’s the falling price of computer hardware. As www.wizzhosting.co.uk/vps/ points out, buying server space from another company and then paying them a fee to maintain it is actually a lot cheaper than trying to do it yourself. Computing costs have fallen exponentially thanks to cloud technologies that have allowed companies to pay just for what they use and nothing more. What’s more, server companies have gotten magnificent at getting unit running costs down, meaning that everybody saves in the long term.
With all this progress, many entrepreneurs have become concerned. It used to be that becoming an entrepreneur was hard and only something that a few people were capable of. But with the rise of affordable ancillary services, the startup lifestyle is within reach of more and more people. While that might be a good thing for innovation and new products, it’s bad news for entrepreneurs. Chances are if you’ve had an idea, somebody else has too, and they’re already pursuing it.
There’s no doubt that startup lifestyles have become a lot more popular over recent years. We’re in the midst of a “startup boom.” But unfortunately, it’s not innovation that’s driving this growth – innovation according to many economists is at its lowest level in decades. Instead, it’s the ease of access. And whenever the accessibility of an industry goes up, the profitability falls.
So what can entrepreneurs do to make sure that they’re part of the one percent who make it to the top echelons and get the highest returns? Part of it has to do with their products, of course, but that’s not all of it. The rest has to do with making sure that operating costs are as low as possible. This is where the lion’s share of the competition will occur. Businesses need to continually look for opportunities to outsource tasks and bring in contractors, according to www.telegraph.co.uk, otherwise they risk being outcompeted by their peers. The startups that will succeed will be those who use technology to lower their costs.