Alternative financial services, electronic payments have profound impact on small business
Jan 24, 2014 Sean Albert
The past several years have been highly turbulent for entrepreneurs of all kinds, especially as small business lending, consumer spending and household optimism have fluctuated erratically. However, 2013 saw some of the biggest improvements in several economic segments, while alternative financial service providers and electronic payment processing capabilities have been focal points for the small business sector.
New technology has largely leveled the playing field among various sizes of companies, while entrepreneurs have not had to worry as much about access to credit thanks to the rise of alternative lending. However, small business owners will need to play their cards carefully when approaching these trends in the coming year, as financial data security, wire fraud and other risks still abound and are expected to proliferate further in 2014.
Additionally, larger banks and smaller financial institutions are becoming more active in the lending market, which might throw a wrench into the financing plans of certain entrepreneurs. By focusing on these two broad aspects, though, small business owners can ensure that their companies are well-positioned for growth in the coming months, as the economy is expected to continue improving in the United States.
Security and credit
USA Today recently listed several trends that have emerged in the small business market throughout the past few years and how they might impact entrepreneurs in 2014. Not surprisingly, the source focused on payment processing security, general privacy protection, increased access to credit through alternative financial service providers and more green strategies.
For one, new technology has provided small business owners with few excuses for not going green, as paperless operational processes are now viewed more favorably among consumers and many companies. USA Today cited one decision made by Delta Airlines this year to completely digitize all flight manuals and other papers to empower pilots and staff members with the information they need, while lowering expenditures and reliance upon finite resources.
According to the news provider, the National Security Agency (NSA) scandal has had a monumental effect on virtually all businesses that are based in the United States, and decision-makers must become more aggressive when formulating privacy and security strategies. One shocking turn of events occurred last month, when Yahoo! committed to keeping all data from its customers out of the hands of agencies like the NSA.
Additionally, the Obama administration and Congress recently decided that the NSA's activities were not within the boundaries of the law, and are expected to pass reforms to curtail surveillance practices. However, small business owners will still need to take responsibility for their data, as well as that of their customers, employees and vendors.
Finally, USA Today stated that small business owners will continue to enjoy better access to credit as competition heats up in the lending market between traditional and alternative resources.
Stand and deliver
Small business owners can get off on the right foot in 2014 by planning now and focusing on the most prevalent issues that face the sector in the coming year. First, entrepreneurs will need to evaluate their ACH cards, wire and other electronic payment processing security procedures to avoid breach, loss of information or damaging exposure.
Regardless of how big or small a breach of financial data might be, the event can serve a crushing blow to a smaller firm's credibility.
Additionally, financing is always at the center of discussions, as small business owners often need credit to launch more progressive strategies. As such, entrepreneurs might want to begin researching all of the lending opportunities available to them to be prepared for credit needs in the new year.