I’ve spent much of the last year talking about how the sites small businesses rely on to advertise and promote themselves — think Yelp and Groupon – are failing them. In fact, helping small businesses at the local level is extremely challenging for technology companies, for the following reasons:

  • Scale. There are millions of small businesses in the country and trying to come up with a product and distribution strategy to reach them can be difficult.
  • Lack of technology adoption. Many businesses still do things on pen and paper. Many don’t have Internet connectivity. Business owners are focused on running their business, not trying out Silicon Valley’s flavor of the week.
  • Balancing value. Most local products need to create value for consumers, merchants, and the company providing the technology. Getting this balance right is very tricky. You can get massive consumer adoption by playing cash-flow games and spending hundreds of millions on marketing. But in order to build a sustainable business, you need to strike a good balance.

These challenges combine to make execution difficult, but a number of companies are making good headway. Not all of these companies will succeed. But I admire them for tackling the tough problems. I’m especially a fan of companies that create operational efficiences for small businesses, create liquidity in markets, and help business owners learn how to market better.
Here are some of my favorite companies in local:

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4-5. Edo Interactive and Swipely. Card-linked offers are the right way to do promotions. Although American Express has made the biggest splash in the space, edo and Swipely are two other companies I like in the space. Edo is approaching the problem by partnering with financial institutions like Ally Bank (more banks are on the way). Swipely is working directly with merchants. Its San Francisco trial is worth checking out.

 

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