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Business and Marketing
How to Start a VoIP Business
‘Small Business Ideas 2014: Why Selling VoIP Is Promising and Practical’ is part 1 of the IPsmarx How to Start a VoIP Business Series.
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Many people assume VoIP telephony (Voice over Internet Protocol) is a highly technical field that offers few opportunities for the non-technical entrepreneur. In fact, the opposite is true: Just as you don’t need to be a mechanical engineer to drive a car, you don’t need to be a software engineer to run a VoIP business. By making use of user-friendly, all-in-one software platforms, you can deliver your own VoIP services, generate revenue and turn a profit. This doesn’t mean selling VoIP services is necessarily easy, but for non-technical yet business savvy entrepreneurs, VoIP offers many practical and promising opportunities.
What Is VoIP?
VoIP (Voice over Internet Protocol) simply refers to the transference of voice data (phone calls) over the Internet. VoIP calls can be made using a multitude of devices, from regular phones and specialized VoIP landlines to computers and mobile devices like smartphones and tablets. VoIP is typically much more cost-effective than traditional telephony (landline or mobile) and provides a similar level of quality and often better functionality. For these reasons, consumers find it an appealing alternative to traditional telephony (both mobile and landline).
Companies that sell VoIP services to end-users are called ITSPs (Internet Telephony Service Providers), VoIP service providers or simply service providers.
Opportunities in VoIP for the Non-Technical Entrepreneur: A Few Examples
International Prepaid Calling
With more people traveling the globe than ever before, it’s easy to see why international telephony traffic has grown substantially in recent years. For example…
•In 2012 alone, the industry experienced a five percent increase totaling 490 billion minutes (Telegeography).
•In the same year, US smartphone users spent $37 billion on international calling (Rebtel).
Whether you know it or not, VoIP is integral to most international calling. As such, prepaid VoIP service providers benefit from the demand for cost-effective international calling. Much of this demand comes from people like immigrants and international travelers who have friends and family overseas whom they need to keep in touch with. This is significant for two reasons: 1) VoIP service providers meet a real need and can therefore profit from stable demand; and 2) they have natural niche markets to target, which allows them to be competitive in these markets.
Residential Service/Small Office-Home Office (SOHO)
It’s no secret that traditional landline telephony is losing ground. In fact, the US Government’s National Health Survey Found that 25% of US households have abandoned traditional landlines. In contrast, residential VoIP has been growing steadily.
The leading research firm Infonetics expects $377 billion will be spent on business and residential/SOHO VoIP services over the next five years. While much of this growth is due to growing demand for business-oriented VoIP services, the desire for a cost-effective, high functionality and high quality fixed telephony is a significant driver as well. Furthermore, many VoIP service providers, including a large number of our own clients, have grown solidly profitable businesses selling residential VoIP services.
Mobile VoIP
People are increasingly using VoIP on their mobile devices. To make VoIP calls from such devices people use software applications called ‘mobile dialers’ or ‘softphones.’ These apps run on devices such as smartphones and tablets and use high speed wireless networks to send and receive data. As these technologies become increasingly more accessible, so too is mobile VoIP.
•US smartphone penetration is already at 62% mobile market penetration (comScore).
•eMarketer.com predicts that the number of smartphone users worldwide will reach 175 billion in 2014.
•As of 2013, 74.8% of people in developed countries are mobile broadband subscribers (mobiThinking).
•3G/4G subscriptions have reached 91.6% in the US and 26.6% globally (Informa).
The growth of supporting technologies coupled with rising demand among both consumers and businesses is pushing mobile VoIP to new heights. In fact, Juniper Research predicts there will be one billion mobile VoIP users by 2017. Research from Analysys Mason has found that 20% of smartphone users are already using VoIP apps. For these reasons, mobile VoIP is one of the most prominent sectors in the industry.
Business Tips for Selling VoIP Services
Target niche markets: You can grow a loyal customer base, generate reliable revenue and outmaneuver big players in VoIP like Vonage by not being Vonage. While the big players appeal to the mass telecom market with generalized services, you can stake out your market share by focusing on niche markets that they don’t. This has proven to be among the most effective strategies employed by IPsmarx clients.
Generally speaking, there are two ways to effectively sell to niche markets, which work best when used in tandem with one another.
1. Tailor your services to your target market. For instance, if people in your target market tend to call to one destination a lot, you can attract and retain their business by offering low-to-no cost calling to this destination; you can make up the difference in revenue by selling calling services to other destinations at higher rates.
2. Speak directly to your target market in your advertising. Research your target market. Then speak directly to their needs/wants in your advertising. While the big players broadcast generalized messaging, trawling the mass market with a wide net, you can attract customers with bait that matches their tastes by advertising services specially designed to meet their particular wants and needs.
The Technology and Technical Knowledge You Need to Sell VoIP Services
If you can operate a Windows operating system and use MS Excel, you can operate the software you need to deliver (and bill customers for) VoIP services. This software is called a softswitch.