Colocation Can Provide Big Benefits for Small Businesses

Increasingly, small businesses are choosing colocation services as a way of realizing the technology and business advantages large enterprises have been getting from colocation.

We field inquiries from companies about whether they’re too small to benefit from CoreSite’s colocation services. It seems there’s a perception that data centers and colocation services are structured to only serve large enterprises.

The fact is that regardless of business size, colocation facilities tend to be more cost-effective, secure and reliable than on-premises data centers, which are often located in costly commercial office spaces that were not designed to accommodate the rigorous requirements of IT systems.

In an earlier blog, we noted that 80% of enterprises were projected to shut down their data centers by 2025. That trend appears to be growing. According to Matt Senderhauf, CoreSite’s Vice President, Interconnection Strategy, “Colocation services are reaching a larger audience. It’s always been one of the key strategies for larger, forward-thinking companies, but now more small- and medium-sized businesses are seeing the advantages of colocation that these larger enterprises have benefited from over the past couple of decades.” We are quoting from the 2023 State of the Data Center Report.

A Vital Strategy for Small Business

The benefits are significant and immediate for small businesses and start-ups that move from on-premises to colocation data centers:

• Competitive advantages created by compute performance and network speed enabling businesses to meet or exceed customer and partner expectations
• Direct connection to cloud service providers, resulting in lower data egress and bandwidth fees
• Reduced costs compared to powering and cooling on-premises data centers
• Robust physical security to protect IT assets and intellectual property
• Virtually unlimited, ad hoc scalability without additional capital expense
• Access to a diverse, integrated and constantly growing ecosystem of managed service providers, network operators, cloud providers, cybersecurity organizations and other solution providers to facilitate and accelerate business growth
• Freed up in-house IT staff, allowing them to focus on revenue-generating activities related to core business objectives

Additionally, for start-up businesses, a colocation strategy may prove more attractive to potential investors, because it requires less up-front capital commitment and ongoing operational expenses.

What constitutes a small business? The uncertainty is understandable, as organizations such as the Small Business Administration, Department of Labor, Chamber of Commerce, IRS, etc. focus on different characteristics, generally basing their categorizations on the number of employees, annual revenues or some unique combination of factors.

Suffice to say that a small business can have fewer than 10 employees or as many as 1,500. Annual revenues can range from zero (in the case of many start-ups) to as much as $40 million. The term encompasses a very broad range of businesses, and a very important category of businesses to boot!

According to the U.S. Chamber of Commerce:

• There are 33.2 million small businesses in America, which combined account for 99.9% of all U.S. businesses.
• Small businesses are credited with just under two-thirds (63%) of the new jobs created from 1995 to 2021.
• Small businesses represent 97.3% of all exporters and 32.6% of known export value ($413.3 billion).
• They also employ almost half (46%) of America's private sector workforce and represent 43.5% of gross domestic product.

It’s clear that small businesses are vital drivers of the U.S. economy and valuable business innovators. For these reasons and more, it’s critical that their infrastructure is high-performing, flexible, scalable, extremely secure, 100% reliable and future-ready.

CoreSite expert consultants can help you assess your needs and quantify the benefits your business can realize by moving to colocation. We can also assist with your migration from your current IT deployment and with your colocation installation.

Ready to bring the advantages of colocation to your small (or medium-sized) business? We're ready to help. Contact us to get started!