Small Business Owners — Are You Trashing Your Cash?

If you're both a small business owner and a head of your household, you probably look at two sets of bills when the end of the month comes around. You might notice that some of these bills look exactly alike — same services provided, same company providing them — until you get to the bottom line, where they're somehow wildly different! Like it or not, businesses often pay through the nose for necessities (like internet connectivity, phone service, and security) that households enjoy for much less. Don't believe us? Read on, and learn about three business binds — and how you can escape one of them.

When it comes to internet packages, price usually depends on connectivity speed, which is measured in megabits per second, or Mbps. The higher your connection's Mbps rate, the faster you can sync those photos onto your hard drive or load up that cat video, and the more your service will cost you. Pretty straightforward, right?

Right — until you start comparing business and residential prices. Comcast, the largest internet service provider in the United States, offers its in-home customers a plan, called "Blast Plus," that gets them 50 Mbps download speed (and 10 Mbps upload speed) for $49.99 a month. But if you want that same connectivity speed for your small business, you have to fork over $199.95 a month — a full four times as much, and that's before you add on fees for things like a static IP address or more-than-bare-bones web hosting. Sure, a business account gets you a few extra perks. It makes sure you're bumped to the front of the customer service line if you have an issue and comes with some free email boxes. But with costs like that, you'd better hope that you won't be running into too many problems, and email is free with Gmail (so it’s not really a perk afterall).

It's not just Comcast, either. AT&T, another major provider of internet service, offers a residential "Elite" plan,which gets you 6 Mbps, for $46 per month, while its equivalent business plan costs $557.80! That's the kind of markup that will have you staying late at the office playing online Scrabble just to get your money's worth.

A small business has more ringing phones than a house full of teenagers. Mom'n'Pop pizza shops need a few landlines to field delivery orders. Tech startups use them to answer customer service calls about malfunctioning gadgets. Summer camps soothe worried parents, specialty shops haggle with their suppliers, and newly self-employed sports agents scream at their clients to "SHOW ME THE MONEY."

Phone companies know you can't cut the cord. But in this case, the high demand doesn't drive prices down — in fact, it's the opposite. If you're a Verizon customer, the Freedom Essentials residential plan, which gives you unlimited long-distance calling, voicemail, three-way calling, and caller ID, will cost you $54.99 a month. Try to get the same thing for your business and it's an extra $25, bringing the monthly cost up to $78.50 per line. AT&T charges $32.99 per month for unlimited nationwide calling from your house and $61.95 per month for the same calls from your office. "Show me the money" is right!

Security: When Preventing Break-Ins Breaks The Bank

Small business owners swallow these fees because they're doing what they love — which makes it doubly important that when they lock up every night, they know they're leaving their life's work in good hands. Security companies know this, and often charge extra for "business" security equipment and monitoring, even when it's the exact same products and services they offer to homeowners. For example, Protect America, which sells GE equipment, has a "Business Security Package" that costs $99 up front and $49.99 per month for monitoring. Even their top-tier home security package (the "Platinum" option) costs less per month than that, and includes equipment that retails for over twice as much as what's in the business package.

Plus, businesses aren't exempt from the security industry's killer ball and chain: the mandatory 3-year contract. Signing one of those when you're just starting out is like buying an expensive tuxedo for a 2-month-old — why pay that much for something you'll probably grow out of? Harry Schechter, CEO of Temperature Alert, found that out the hard way when he started looking for an alarm system to keep an eye on his wireless temperature monitoring company. He called up ADT — and quickly regretted it:

"They wanted to charge me 50 to 60 dollars a month for monitoring, and they wouldn't even schedule an installation until I signed a three-year contract," Schechter remembers. "I thought that was outrageous — my business was growing, and I didn't know if I'd be in the same place or need the same things in three months, let alone three years. Still, I needed to protect the stuff in my office, so I signed the contract. It took two whole days for the installer to call me. Luckily, I got tired of waiting and found SimpliSafe, a company that sells wireless home security systems with no-contract monitoring plans. I ordered my system online and installed it myself in 5 minutes, and in even less time than that I called ADT and canceled my contract."

Contracts offer the opposite of what small businesses really need: flexibility. Luckily, as Schechter discovered, there are some security options that have that built in. With customizable alarm systems, business owners can piece together a package that works for them, whether that means adding temperature monitors for an ice cream store's walk-in freezer or glass break sensors for a pet shop's python's tank. Wireless technology lets business owners keep one eye on the office when they have to step away. Some companies even offer no-contract monitoring plans and portable technology, so you can cancel your plan if your venture flops, or pack up your system and take it with you when you upsize. A small business is already a risky investment — no need to throw more money at something when you can breathe easy for a much fairer price.