The difficulties in learning to run a successful Business are numerous, especially among smaller companies. We hear so much about the right type of assets or investments, and a younger business can find itself torn in a number of directions by components that may appear lucrative. One of the best examples is Cryptocurrency. Cryptocurrency is something we can’t escape from, and many companies might think about incorporating cryptocurrency into their company, but is there a place for cryptocurrency in any small business?
Is Crypto “a Fad?”
The fact of the matter is that cryptocurrency is something that, for better or worse, is here to stay. Cryptocurrency is not necessarily a fad, but there are a number of gray areas to be addressed. There are many cryptocurrencies that have not stood the test of time and have been unveiled merely to compete with other cryptocurrencies, only to fall at the first hurdle. But as companies foresaw the fall of FTX and many other organizations still view cryptocurrency with a raised eyebrow, while cryptocurrencies are not a fad, it’s something that may not last decades. Cryptocurrency has a limited amount of money, and new currency cannot be printed. This is why it’s important to recognize that cryptocurrency is not a passing thing, but may very well have a limited lifespan.
Can Crypto Help a Business Owner Beyond the Business Dealings?
In the short term, business owners can benefit from incorporating an understanding of cryptocurrency into their business. You could accept cryptocurrency into your business to get more customers, but you can also use cryptocurrency and the trading market in general as a lesson in dealing with fluctuations in the market. Cryptocurrencies like Binance Coin (BNB) and Bitcoin (BTC) will fluctuate, and making the change from BNB to BTC may seem essential because you feel like you need to keep on top of emerging trends.
This can be a very difficult thing to deal with because as we spend more time thinking we need to invest in a “hot stock” or cryptocurrency, we end up having to chase something that may not be worthwhile in the long run. Cryptocurrency is not a passing thing, and it’s been here for a long time, however, business owners need to learn from those investors who view cryptocurrency as the only investment solution. Here are a few things to bear in mind when it comes to cryptocurrency as an investment strategy:
- Ensure you have a real understanding of the market.
- Balance your portfolio effectively to make sure you have investments in other stocks and shares, not just cryptocurrency.
- Being aware of how investing can impact you as a business owner.
The latter point is critical because when we are starting a small business, we can believe that we’ve got to find the right investments to keep us going if the business encounters tough periods. When we think that investing and using our hard-earned money to buy cryptocurrency or shares to keep us afloat, it’s important to use the Warren Buffett approach here and remember that investing is about the long-term.
Small Businesses can make the mistake of thinking that they’ve got to pick up in a very short period of time. 12 months is often considered the benchmark to make any impact, but for any small business to profit, they have to be aware of what the long haul consists of. When we start to think about investing to ensure we are keeping our business afloat, the bottom can fall out of these investments, meaning we don’t just lose what we put into our stocks or shares, but we can lose our business as well. This is why it may be worth looking at practices like equipment finance. This is an approach that can help your business to keep going, while also delivering the essential services to your customers or clients.
Cryptocurrency is something that can help business owners beyond just doing business, but should be part of a wider investment. It is essential to be tactical as a business owner and understand the sense of shrewdness that comes with finances as this can help you be a better business person.
Is It Worth Accepting Cryptocurrency Into Your Business?
To answer this question, you’ve got to think about what cryptocurrency can be used for. Many people look at cryptocurrency as a commodity, like stocks or shares, but smaller businesses can use cryptocurrency as a payment method. Businesses can accept cryptocurrency by getting set up with a crypto exchange or you can accept cryptocurrency payments manually, and steps to withdraw the cryptocurrency by moving to a digital wallet or exchanging it for your chosen funds.
When you compare cryptocurrency to the traditional Point of Sale (POS) systems, you can expect to see some of the following benefits:
- Convenience. Cryptocurrency provides customers with an extra payment method.
- Improving sales. As cryptocurrency is one type of currency, this could mean that your business experiences a greater increase in sales. Small businesses that need to expand to international customers could benefit. Your business has to be worth marketing on a grander scale if you are to use cryptocurrency. Once you start accepting cryptocurrency you may see a benefit, but this is not guaranteed.
- Saving money on fees. Businesses can find themselves held to ransom by transaction fees. For example, if you accept credit card payments through a credit card processing company, in addition to the 25 cents for a card swipe, you may also be charged between 2% and 4% of the total of the transaction. To bypass this you would need to implement a credit card minimum on your POS, but cryptocurrency can make a big difference here because the costs amount to less than 1% of each transaction.
- Increased protection. Cryptocurrency is a decentralized one, and this can help to protect businesses from any fraudulent activities.
Should a Small Business Accept Cryptocurrency?
The challenges small businesses face, especially in comparison to large-scale businesses, are many. Large companies have the power to negotiate lower fees when they are accepting digital payments, which is a luxury smaller companies do not have.
Smaller businesses can struggle to find alternatives to the big card networks, meaning that they have no choice but to pass the fees onto customers by raising the prices. The knock-on effect of this is that they are potentially putting themselves out of business because they’re not able to compete with the bigger companies. Therefore, businesses can take advantage of cryptocurrency and the blockchain to decrease payments through an open payment system, resulting in lower transaction fees and a greater degree of protection.
As the world of cryptocurrency is evolving, small businesses will not just benefit from a more competitive business, but they will also have quicker access to funds. Accessing funds for a banking transaction can take a number of business days. Therefore, if there is a lag between receiving a payment from a customer and paying a supplier, this could cause major financial hardship. A cryptocurrency approach could mean instant access to funds, ensuring that the business survives any of the common economic shocks.
As businesses can become more competitive, this means a greater degree of freedom in how they start to promote, experiment, and diversify their services.
Are There Drawbacks to Cryptocurrency?
Of course, with any benefits, there can be risks. The risks of cryptocurrency have been widely reported. There are three major risks that businesses need to observe:
- The volatility of the currency. Many of us are aware of the volatility of cryptocurrency. The value can peak and trough so many times, we don’t have to go very long without hearing how it’s hit a new low. In order to mitigate this, you would need to find a way to translate the cryptocurrency black to your own currency quickly, which also means keeping a close eye on the value of the currency itself.
- Technical concerns. It’s all done via a digital wallet on a digital exchange. Small business owners may find themselves ill-equipped to deal with the technology, and the business may not be able to accept it altogether. Small businesses can find themselves undergoing a deep learning curve. Therefore, having to run a business at the same time may prove complicated.
- The cybercrime threat. While the transactions eliminate threats, it’s important to know that it’s not completely safe from cybersecurity. And as cryptocurrencies are not currently insured, this may prove to be too risky. While cryptocurrency companies are working to make changes to this, and specifically the platform Coinbase is prepared to insure losses completely and are subject to FDIC insurance up to the value of $250,000 like a traditional bank, there is still a lot to consider, especially if you wanted to do business via a personal wallet.
Is there a place for cryptocurrency in small businesses? Clearly, there is a lot to shout about, but as we’ve laid out the benefits and risks, it’s important for you to understand if this is a world you can get involved in.
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