SMB payment platform HoneyBook first took a hit, then saw massive payment volume growth in 2020
- HoneyBook aims to appeal to more small business owners.
- With so many apps with so many purposes, this could be a challenge going forward.
HoneyBook, a platform that helps solopreneurs manage projects and payments, recently announced that it hit $3 billion in business booked on the platform, a billion of which came from the past year alone.
HoneyBook hit $1 billion in total payment volume in 2019.
HoneyBook makes money through monthly subscription fees and through transaction fees. So when its core user base -- freelancers and event-based small businesses -- was suddenly being threatened by the pandemic, HoneyBook was, too.
“Mid-March, when we saw so many of these service-based businesses -- these small business owners-- take a hit, we knew that we were going to take a hit at the same time,” said Oz Alon, co-founder and CEO of HoneyBook.
But by the end of March, HoneyBook started to see an increase in activity on the platform. More transactions were being processed, even from businesses that originally saw a hit. Additionally, the company started seeing more businesses join the platform -- even from verticals they didn’t serve before.
“Suddenly, we saw this nice uptick, and a nice incline all the way to the end of the year,” said Alon. “I think that's what really created the momentum that we eventually saw.”
Ultimately, HoneyBook was able to capitalize on a situation that looked like it was going to leave it shipwrecked.
It may be the case that small businesses have always been more inclined to go digital, even before Covid-19 hit. Financially, digitalizing certain services could make a lot more sense.
“Honeybook and other customer relationship management tools offer small and medium sized businesses the functionality of additional employees without the added payroll costs,” said Cris Carillo, co-founder of Allied Payments, a payment processing consulting service that helps businesses accept payments online. “The synergy between workflow automated tools is growing every day and they can make a big difference for small and medium businesses.”
Automation in itself is a big motivator for small business owners, as well. And it may not even be an option for a business to succeed -- it may be a necessity.
“Every successful small business owner knows that there are three fundamental things they need to get right. One, they need to focus on growing the business. Two, they need to continuously find ways to do more with less. And three, cash is king,” said Andrés Ricaurte, svp & global head of payments at Mphasis, a global technology and consulting firm focused on enterprise transformation. “It is impossible to do these, at least not for a sustained period of time, without automation.”
Automation is also a way to decrease chances of human error, which could help business owners avoid a lot of damage control in the long run.
“If you have an in-house employee, they might be good, but they’re still human, and errors happen sometimes,” said Dimitris Tsapis, accounting consultant at Retail CRM Cloud, a CRM software specifically made for retailers. “But by having the process semi-automated, you can rely on the accuracy and keep a good impression on your clients.”
But even with all these benefits, platforms like HoneyBook are not without their challenges -- they can be more time consuming and costly.
These platforms often charge extra to process transactions for their customers. On top of that, it still takes them time to process payments.
“Platforms like Honeybook almost always charge more for their processing because they aren’t an actual processor,” said Kristin Uptain, marketing manager at Redde Payments. “They usually outsource their processing, which means, in order for them to make a profit, they have to tack on additional charges.”
Then there’s the fact that if users use more than one tool, things aren’t automated and the work can get messy.
“While most apps offer APIs in one form or another, the space is still highly fragmented,” said Ricaurte. “This puts the onus on the SMB itself to figure these things out.”
HoneyBook believes it can offer a solution that provides its users with all the necessary business needs they may want -- invoicing, payment processing, client booking, and project management.
But not everybody uses HoneyBook, and other companies that offer one or two tools for solopreneurs may have already started to see the benefit of branching out and broadening their services.
The potential for competition and maintaining users' interest within a single platform are challenges HoneyBook will need to face even more going forward.
“Today, a service-based business needs to use many, many tools,” said Alon. “But if they’re a service-based business that doesn’t use HoneyBook, they will use DocuSign to sign some documents. They will use PayPal or Venmo to charge for money, or maybe they will use Square. They will use some kind of CRM to manage the communication with their client -- they’re going to use all these tools.”
“All these tools are not going to create a cohesive experience for their clients. And what these businesses understand today more than ever before is that they want to create this great experience online for their clients.”
For HoneyBook, it’s a matter of figuring out how to keep everything in one place -- including the user’s interest.
“I think the future is the ability to close more deals online, the ability to communicate and express yourself in the best possible way online,” said Alon. “And then to leverage that, and to consume all your financial needs from a platform like HoneyBook.”