Small businesses starting out today have a few things going for them that make it much easier than in the past. For one, the cost to get a team equipped with computers and software is significantly lower now than it has been.

Refactr has been able to make use of many free or low-cost hosted applications rather than shelling out, up-front, for “enterprise software” licenses (and really who wants that crap anyway).

We use Basecamp (which includes a Campfire chat) for communication and organization between the three Refactr principals, rather than for managing projects. I would imagine the new version of Backpack would work for us in that regard but we have too much info in Basecamp now to switch. We use Google Calendar for tracking our schedules as it is more powerful and flexible than the calendaring in Backpack.

To solidify our 37signals fanboy status we round out the suite by using Highrise to keep tabs on who we contact in terms of potential projects and potential hires. We love Highrise but it is bittersweet for us as we were going to begin development on a similar application just before it was announced.

Our team tracks its time in Harvest using a “grand-fathered” deal that is no longer available. It works well because it is easy and allows us to add contractors into the mix. We manage our payroll and taxes via PayCycle and are impressed with it’s feature set and ease of getting started. 

We use Gmail for our domain and collaborate on documents and spreadsheets with Google Docs. This used to be enough of a frustration that we broke down and purchased Microsoft Office Suite (after trying to make due with NeoOffice for months). Google’s offering is much improved in the past month and with Gears and offline access to your docs – so much so that I often prefer it to opening Word or Excel (I especially hate the Mac interfaces for these programs).

Aside from Textmate and Photoshop CS3, nearly everything we use is or could be a hosted web application. Since that is what we build, it is good to see the offerings mature and see evidence that companies like ours can survive and thrive by using these tools.