Broadband Internet Can Save Startups $16K a Year: Report

Savings may also be greater for companies that tap into broadband for a host of other needs related to their business.

When pursuing the American dream of starting a business, new entrepreneurs save $16,550.52 with high-speed broadband Internet, according to the report €œStart-Up Savings: Boosting Entrepreneurship Through Broadband Internet,€ released by the Internet Innovation Alliance (IIA) and the Small Business and Entrepreneurship Council (SBE Council). The analysis looks at the top 10 ways broadband creates significant savings for a solo entrepreneur, not only during the startup phase but also in yearly savings.

The report found broadband is lowering the cost and barriers to entry for starting a new business, and access to this resource provides entrepreneurs innovative tools, new networks and business opportunities. The vast improvement in voice over IP service offers an alternative for startup businesses, as well as cost savings. A traditional business line costs on average $58 per month (excluding taxes and fees) or $696 on an annual basis for unlimited nationwide calling, according to the report.

The average monthly cost of the eight most popular VOIP providers in the United States€”all of which include unlimited nationwide calling (incoming and outgoing), most on a month-to-month contract basis, with several vendors providing free set-up and headsets, as well as a free second business line€”is $22 ($264 annually). In addition, if an entrepreneur chooses a small-office/home-office (SOHO) VOIP option, the cost can be as low as $6.78 per month ($81.36 annually). Broadband Internet has made the home office a major advantage and cost-saving opportunity for startups. The report looks at the costs of Class B office space, which appeals to wide array of industries and is more affordable for small, young firms than more exclusive Class A space.

In the €œOffice Market Trends Q4 2011: United States€ study, cited in the report, Grubb & Ellis offered data on office rental rates for 60 metro areas. The average asking rent for these 60 areas is $20.60 per square foot. €œIf one assumes 300 square feet of office space for a startup, the average annual rental cost would come in at $6,180 annually. In contrast, additional rental outlays for a home office would be zero. "Entrepreneurs fuel the economy and job growth," said Karen Kerrigan, president and CEO of the SBE Council. "Broadband connectivity, particularly through mobile devices, is propelling entrepreneurs and new businesses responsible for creating millions of new jobs every year."

According to the Kauffman Foundation, young firms were responsible for nearly all the net job creation in the United States between 1980 and 2005. Kauffman estimates that new firms create approximately 3 million jobs each year, and have created 40 million new jobs since 1980. Savings may also be greater for businesses that tap into broadband for a host of other needs not covered in the study, including purchasing equipment and furniture, using cloud services, or marketing products and services, Kerrigan noted.