Startup Launches Service to Reduce Fixed Costs Such as Raw Material Expenses and Remittance Fees
[Asia Economy Reporter Kim Heeyoon] As the COVID-19 pandemic prolongs, many domestic small and medium-sized enterprises (SMEs) are experiencing sales declines and business stagnation, drawing attention to various startup services aimed at reducing the fixed cost burden for SMEs and self-employed individuals.
According to the 'Self-Employed Status Survey' released by the Korea Economic Research Institute, 26.2% of self-employed individuals considering business closure cited fixed cost burdens as a major factor. The Small Enterprise and Market Service's 'Small Business New Hope Fund Performance Analysis' revealed that 96.6% of the disaster relief fund 'New Hope Fund' for small business owners was used for fixed cost expenditures such as rent, labor costs, and raw material purchases.
For continuous business operation, expenditures on various fixed costs such as rent, labor costs, technology maintenance fees, and raw material costs are inevitable. However, for SMEs or micro self-employed individuals facing unstable business conditions, fixed costs are the first area to be cut. Startups focusing on this issue have launched various services based on technological capabilities. These services help reduce the fixed cost burden for SMEs and self-employed users, thereby lowering management expenses and improving work efficiency.
Reducing Unnecessary Fixed Costs through SaaS Efficiency Management
Financial fintech startup Gowid offers various discount benefits on SaaS (Software as a Service) essential for operating SMEs and startups. It provides about 50 SaaS products including ▲AWS ▲Google Workspace ▲Notion ▲Segment with free credits worth up to $10,000 and discounts exceeding 50%.
In particular, the SaaS Tracker service automatically categorizes and analyzes SaaS payment details used by customers, significantly reducing unnecessary SaaS expenses. With remote and telecommuting becoming common, the types and usage rates of SaaS used to enhance work convenience are gradually increasing. This has led to many unnecessary charges due to duplicate payments for the same service, abandoned unused accounts, and unawareness of services switching from free to paid. Gowid stated that an analysis of usage data from 350 companies using the SaaS management service showed an average monthly discount benefit of about 200,000 KRW. Additionally, it offers a service allowing corporate card members to use expensive IT devices in a subscription format.
A Gowid representative said, "The IT subscription service replaces fixed costs with variable costs, reducing the burden on startups operating with limited resources," adding, "It also eliminates complex tasks such as financial management and device disposal, thereby improving work efficiency."
Livestock Direct Transaction Platform Helping Reduce Raw Material Costs by 30%
For small business owners operating workplaces with fewer than 10 employees, raw material costs represent a significant portion of fixed costs. According to the '2019 Small Business Status Survey' by Statistics Korea, the burden of raw material costs ranked third among management difficulties for small business owners at 26.6%, following commercial area decline (45.1%) and intensified competition (42.2%).
The livestock direct transaction platform Meatbox is recognized for alleviating the raw material cost burden for self-employed individuals running restaurants and butcher shops through its direct transaction platform. Purchasing products via Meatbox allows buyers to obtain goods at prices 15-30% lower than usual.
By reducing distribution steps, Meatbox lowers costs and transparently provides daily market prices for Korean beef (Hanwoo), pork (Handon), and imported meats, enabling rational consumption through price comparison before purchase. It also operates a group purchase service offering products at prices even lower than existing discounts and a sample zone where users can try new products when selecting or changing ingredients. The 'Lowest Price Guarantee' compensates buyers with Meatbox coupons worth 300% of the price difference immediately if Meatbox's product is more expensive than the same conditions on other shopping malls, helping small business owners reduce costs.
A Meatbox representative explained, "Currently, about 70,000 restaurants and 10,000 butcher shops use Meatbox to achieve cost reduction effects," adding, "As the number of users rapidly increases, cumulative transaction volume reached 850 billion KRW in June and monthly transaction volume hit 30 billion KRW in September."
Reducing Fixed Costs for Small Businesses through Integrated Foreign Exchange Solutions
Foreign currency remittances through banks incur telegraphic transfer fees, remittance fees, intermediary bank fees, and receiving bank fees. Small and medium export-import companies and platform businesses requiring numerous small overseas payments have faced cost burdens and inefficiencies due to fees ranging from 13,000 KRW to 50,000 KRW per transaction while processing over 500 remittances in two days by one or two staff members. Centbee offers Centbiz, a corporate foreign exchange solution providing overseas remittance and payment services specialized for SMEs at fees up to 70% cheaper than traditional bank services.
This service simplifies the remittance application process, saving companies over 99% of work time. It also lowers fees from the usual 8-11% range to below 2% by using methods such as 'Pooling,' which consolidates multiple small remittances into one, and 'Pre-funding' and 'Post-funding,' which involve paying lump sums to partner banks in advance or afterward. Additionally, Centbee provides receipt management, monitoring, and dedicated customer service through the Centbiz web service for SMEs and startups that find it difficult to hire dedicated foreign exchange personnel, reducing fixed costs such as fees and labor expenses.
One export company that sends about 3 billion KRW per transaction through existing channels had to bear a high foreign exchange loss of 120 million KRW, 4% of the payment, due to exchange rate fluctuations. Centbee also offers foreign exchange hedging services for SMEs exposed to foreign exchange risks. Export SMEs have been vulnerable to foreign exchange risks caused by exchange rate fluctuations between the transaction occurrence date (sales aggregation date) and the actual payment remittance and receipt date. Centbee explained, "Our self-developed 'Automatic Hedge System (AHS)' fixes the exchange rate on the transaction occurrence date, eliminating potential high losses from foreign exchange losses for corporate clients."
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