Small Business Slowly Adjusts to an Expensive and
Complex New Economy
Kade Twist
Benton Foundation
Introduction:
Digital opportunity "The Internet has created the ability for
businesses to streamline processes and make those processes more
efficient, and that's driven competition and productivity further
than we've seen in the past," said Melissa Shore, a research
analyst at Jupiter Communications in New York. Efficiency and increased
productivity are two variables that can improve any small business
equation, regardless of whether or not a particular business' market
focus is local or international. In the very least, the Internet
provides small businesses with the unique ability to market goods
and services, provide consumers with timely information and an additional
means of guiding consumers to their doors. The Internet also allows
small businesses to manage their finances and expenses online and
place orders online through business-to-business portals where distributors
compete for the best price -- basic tasks that improve profitability.
More small businesses are going online everyday, but a huge number
have yet to make the transition. International Data Corp's "1999
Small Business Survey" revealed that only 52% of small businesses
used the Internet and only 8-to-9 % of small businesses had broadband
access. Furthermore, only 27 percent of those companies with Internet
connections have their own Web sites -- even fewer are set up to
offer direct e-commerce services. --It should be noted that these
numbers were projected to more than double by the end of 2001. --
These statistics point to a wash of missed opportunities when considering
the survey's most significant finding: online businesses showed
faster growth than those without a presence on the Web.
An old Workhorse Faces New Challenges
It is no secret that the American economy depends upon the success
of small businesses -- those that employ fewer than 500 -- for innovation,
productivity, job growth and stability. According to the Small Business
Administration (SBA), small businesses represent more than 99% of
all employers, employ 51% of private-sector workers, employ 38%
of workers in high-tech occupations, provide about 75% of new jobs,
provide 51% of the private sector output and represent 96% of all
exporters of goods.
Yet, in spite of their historical success and productivity, many
small business are struggling to capitalize on the emerging opportunities
of the New Economy because they lack the time, money, expertise
and broadband access needed to develop their IT capacity in a timely
and strategic manner. For instance, how does a small business owner
that employs 5 or 10 people find the time to develop a technology
plan and an Internet strategy? How can small businesses, which the
SBA contends are primarily financed by loans and credit cards, commit
to building their IT capacity if they are barely meeting the demands
of payroll and basic operating costs? How can a small business manager
plan and develop an Internet strategy if that manager lacks e-business
expertise and knowledge of the related services available? How can
a small business implement its Internet strategy without access
to broadband connectivity?
Furthermore, many small businesses still question the relevancy
of New Economy tools, and global market rhetoric because the vast
majority of their business is conducted locally -- in the real world.
Small businesses, especially those employing 20 or less, find themselves
at a self-imposed philosophical crossroads of sorts, where two seemingly
opposing business paradigms -- the brick and mortar store front,
which is grounded in time and place vs. the virtual store front,
which is grounded in speed and virtual space -- when in fact both
paradigms must be embraced simultaneously. Therefore, small businesses
not only face time, capital, knowledge/expertise and capacity barriers,
they also face philosophical barriers.
Community
Technology Centers offer small businesses access and training in
rural and under-served communities
Small businesses in under-served rural and urban communities often
face additional challenges in the New Economy for many of the same
reasons they faced additional challenges in the old economy: limited
public resources, limited access to capital, inadequate telecommunications
and utilities services and an undereducated workforce with limited
skills. The lack of access to relevant information, training and
technical expertise hinders the adoption of new technologies for
these small businesses. In many cases, getting an appropriate broadband
connection is either an impossibility, or prohibitively expensive.
But perhaps the greatest barrier is the lack of access to capital
-- after all, under-served rural and urban communities are under-served
because, first and foremost, there is a lack of existing capital
and a lack of outside capital investment.
The availability of public access to broadband Internet access combined
with training and technical assistance is critical for helping small
businesses in under-served rural and urban communities get a handle
on e-business tools and expedite the rate in which small businesses
adapt themselves to New Economy. The establishment of Community
Technology Centers (CTCs) is critical to the future success of these
small businesses. Fortunately, many CTCs originally established
through the Department of Education's CTC program during the Clinton
Administration also serve as Small Business Technology Centers (SBTCs).
SBTCs are capable of providing small businesses with access to advanced
office, networking and e-business software, certified hardware and
software training, employee recruitment and contracting/outsourcing
opportunities. But unfortunately, the Department of Education's
CTC program faces many uncertainties under the Bush Administration,
one of which is elimination. Federal policies clearly need to be
refocused to ensure that small businesses are provided with the
tools, training and resources necessary to ensure their successful
transition from the old economy to the New Economy. Establishing
and sustaining high-quality CTCs is one of the most cost-effective
means of achieving this end.
SBA provides help
for small businesses attempting to succeed in the New Economy
One of the best sources of information for small business managers
attempting to lead their business into the New Economy is the SBA.
The SBA has a number of excellent resources to help small businesses
become Internet enabled. Here, small business managers can find
helpful tips for operating in the digital economy, such as: Web
site development and hosting; marketing; a guide to application
service providers that help businesses purchase off-the-shelf operating
applications (everything from finance to human resource management)
at a much lower cost, as well as have someone else manage and host
the data; partnering strategies (finding similar organizations that
can share resources and expenses can help you achieve your goals);
and, strategies for automating and streamlining traditional organizational
processes and daily routines through the Internet
Perhaps the best place to start at the SBA is the Small Business
Classroom (http://www.sba.gov/classroom/),
which is an online resource designed to inform and assist entrepreneurs
in the development and implementation of successful Internet strategies.
The Small Business Classroom provides a wide variety of online classes:
How to Raise Capital for a Small Business; The Internet Economy;
Basics of the Internet; Growing Your Business on the Web; Basics
of E-Commerce; and, Building Your Business with Web Marketing.
The SBA also provides free Internet access and computer training
to small businesses through 58 regional Small Business Development
Centers (http://www.sba.gov/sbdc). The SBDC program is designed
to provide counseling, training and technical assistance in all
aspects of small business management -- including e-business management.
SBDC services include, assisting small businesses with financial,
marketing, production, organization, engineering and technical problems
and feasibility studies. Special SBDC programs and economic development
activities include international trade assistance, technical assistance,
procurement assistance, venture capital formation and rural development.
In addition to SBDCs, the SBA and the Department of Education in
May, 2000 established a strategic relationship to better coordinate
federal resources in disadvantaged urban and rural areas so that
existing CTCs could meet the needs of small businesses more effectively.
This relationship between the SBA and Department of Education had
been useful in helping CTCs adopt more practical and relevant services
and resources for small businesses. However, the Bush administration
has failed to build upon this relationship. Instead, much of the
progress that this relationship had made during the final months
of the Clinton administration has been impeded by the Bush administration's
lack of leadership and commitment to community technology access
issues. Small businesses would benefit greatly if the Bush administration
refocused its policies and began supporting strategic relationships
-- like the SBA and the Department of Education - that contribute
to making CTCs more relevant, effective and readily available for
small businesses.
Conclusion:
A workhorse in E-business clothing America's economy depends upon
small business. Yet, small businesses, especially those in under-served
rural and urban communities, are struggling to adapt to the complex
demands of the Internet-driven New Economy. The Internet provides
small businesses with the opportunity to market goods and services
and improve efficiency and productivity. However, many small businesses
lack the time, money, expertise and broadband connectivity to take
full advantage of New Economy opportunities. Fortunately, the SBA
and CTCs provide the information, technical assistance, tools, training
and resources that small businesses need to begin their transition.
But unless small business owners and managers do their homework
and actively seek out relevant and timely information and resources
their transition will be a slow and difficult one.
Related
Web Resources
CTC
Net Information and resources concerning Community Technology Centers
http://www.ctcnet.org
Small Business Administration Information and online classes
small businesses seeking to enter the New Economy
http://www.sba.gov/classroom/
Small Business Development Centers Regional SBA
one stop shops for small businesses seeking to enter the New Economy
http://www.sba.gov/sbdc
Why You Need a Web Site
by Robert Sullivan
http://www.isquare.com/website.htm
Marketing Your business Online
by Dr. Kevin Nunley
http://www.isquare.com/mktbiz.htm
Can't foot the bill for IT staff? Go online
by Mie-Yun Lee
http://www.buyerzone.com/features/savvy_shopper/ss001025.html
Internet Tools Summary
Essential links, compactly organized, to help you explore Internet
tool http://www.december.com/net/tools/index.html
The Small Business Advisor
Information and tools for the small business manager
http://www.isquare.com/
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