SMB savings using broadbandBroadband can save entrepreneurs $16,550 when they start a new business, according to research released Wednesday from the Internet Innovation Alliance and the Small Business and Entrepreneurship Council.

The difficult economy in the last few years has been “tough on small business startups,” said Ray Keating, chief economist for the SBE Council on a conference call with reporters Wednesday to introduce the research results. That research, he said, shows “how much worse it would be if entrepreneurs lacked opportunities for broadband.”

The IIA and SBE Council research, titled “Start-Up Savings: Boosting Entrepreneurship through Broadband Internet,” looked at 10 requirements that entrepreneurs incur when starting a business. Researchers compared the cost of using traditional versus on-line options for meeting those requirements.

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Where entrepreneurs can save the most is in using a home office rather than renting office space—an option now used by approximately 52% of new businesses, said Keating, who suggested that broadband availability helps make a home office a viable option.

To estimate the cost savings of working at home, researchers looked at the cost of renting 300 square feet of Class B office space in 60 metro markets and came up with an average potential cost savings of $6,180 per year.

Other areas where entrepreneurs can see substantial savings include mobile apps, website design and hosting, and accounting. Researchers estimate that entrepreneurs can save $3,500; $2,100; and $1,800, respectively, by using broadband options.

The IIA and SBE Council estimated the savings from using mobile apps based on previous SBE Council research, which found that business owners saved a median of four hours per week by using mobile apps. Using an estimated median salary for a self-employed individual with less than one year of experience of $35,000 based on data from Payscale.com, researchers calculated the cost savings.

Other areas where entrepreneurs can reduce start-up costs by using broadband include printing, telephone service, logo design, business incorporation, newspaper subscriptions and travel costs, the IIA and SBE Council said.

The IIA calls itself a “broad-based coalition of business and non-profit organizations that aim to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband internet.”  Business members include AT&T as well as telecom equipment manufacturers such as Alcatel-Lucent and Ciena.

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One thought on “Report: Broadband Can Minimize Small Business Start-up Costs

  1. Once we all get high speed internet access many new small startups will emerge. Currently rural areas are suffering from lack of connectivity, but soon things are set to change as governments are finally realising how important it is. The future is coming. It just isn't here yet.
    Bring IT on.

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