Why SME should focus on blockchain

Blockchain-based smart contracts are a huge opportunity for organizations, with the potential to radically transform the way business applications are build, from securely executing business processes to automating transactions between companies across a blockchain network. Countless big organizations, from technology companies to financial giants, started to heavily invest into the new technology and make partnerships in order to drive it forward, as they see huge potential here.

What the blockchain and smart contracts has in store for smaller businesses, which don’t have the necessary resources to invest in new technologies and often are left behind when a new technological leap forward is made, despite being the backbone of a healthy economy?

Blockchain promises to be such a huge leap forward. But why do we think that things can be different for small businesses this time?

While modern business environment requires companies to make technology integral to their strategy and smart contracts are already changing the way agreements are made in the digital world, few small businesses have the understanding of blockchain technology and even fewer can allocate the necessary resources in terms of money, time and talents to utilize it and benefit from its advantages. Others are still questioning how blockchain adoption can benefit them. Here, we are making the case for smart contracts as the new business model of the future and will bring some solid argument for companies to start focusing on the new technology.

The greatest breakthrough of smart contracts is that they take out the middleman and execute on contract terms automatically, based on agreed-upon rules. This technology has the potential to shake up a wide variety of industries from finance to healthcare. And while the need to create paper contracts can be difficult and inefficient for small businesses, and especially start-ups, blockchain comes with the promise to make agreements between businesses both cheaper and easier.

Many business processes that once required personnel, middlemen or expensive licenses now have a solution to easily replace these at little cost, thus blockchain enabling companies to stay efficient and competitive. Using smart contracts to create, check and enforce contracts between users – whether it be invoicing, paying employees or bills – small businesses can make a positive financial impact, by inexpensively streamlining the flows that keep them in business.

Blockchain can help bring products and transactional services to market quickly and at lower costs. But it not only reduces costs, but also allows businesses of all sizes to compete on a more level playing field.

A big problem preventing small businesses to develop and equally compete with larger peers is the cash flow, which can make the difference between success and failure. Smart contracts improve the cash flow as they allow for the automatic and instant payment of invoices once a given transaction has been processed. Also, with the distributed ledger that is central to the blockchain technology, there are fewer intermediaries involved in the business process, which means there are fewer costs and less potential exposure points.

Improved cash flows and reduced costs are crucial for business competitiveness. Providing this two key elements, blockchain-based smart contracts has the potential to bring new business to small business. And once you have more business, the focus should be on how to keep it. A major pain point here is how efficient you are in shipping products to customers. Logistics and shipping involves much stress and paperwork in order to keep and manage everything in proper order. It is very hard to monitor the current location of shipments and goods in real-time in most cases, and delays in shipments results in extra costs. With blockchain it is very easy to track each stage of a product’s journey, from the production of its components to the delivery of the final product to the customer.

Smart contracts and blockchain also have the potential to improve businesses’ privacy and security. A system of public and private keys, protected by a layer of cryptography, ensures that participants of blockchain services can be verified by those same services without exposing their most sensitive personal financial or identifying information. Thus, companies no longer need to shoulder the risk of handling large amounts of personal data, which is a boon especially now when regulations regarding this issue are getting tougher.

In conclusion, despite being the backbone of any major economy, smaller firms face many disadvantages in the current business environment: high entry barriers to low protection to risks that barely affects larger players. In many cases, a great enemy is the regulatory framework itself, making harder for SMEs to find financing, scale operations, process payments and recruit talents – including the very needed IT talents required by a stronger and stronger digitized world.

This is why, at Aurachain, our platform was developed to enable even small businesses to stay in front of the new digital wave, by allowing them to rapidly develop template-based smart contracts that can be quickly launched into operations. Because blockchain is a rising wave and the surfers that will reach its top first will be the first to succeed.