The Internet's Impact on Small Businesses

Small and medium-sized businesses (SMBs) are a global phenomenon that comes on the back of capitalism. In the United States, the narrative surrounding small businesses and business owners borders on manifest destiny, and many legislative apparatuses are geared toward fulfilling their birthright.

And yet, digitalization has done more to increase the emergence and success of SMBs on a global-scale than any policy change or claim to divinity through sweat and tears. 

Small businesses today look much different than they did before. Digitalization hasn’t just changed what they look like, it has changed what it means to be a small business owner. 

A Rough Portrait of SMBs Today

Large e-commerce platforms changed the way people around the world do business and acquire products and services. Digital platforms such as Amazon and eBay provide SMBs “plug-and-play” infrastructure and the opportunity to put themselves in front of an enormous, built-in global customer-base. 

Companies can open and customize storefronts, upload merchandise, communicate easily with customers via email or otherwise, handle payments, work through affiliates for shipping services, place targeted ad buys powered by algorithms, get micro-loans with ease, buy supplies and services (e.g., reviews, analytics, etc.), and much more. E-commerce platforms consolidate key tools and functions in one place, and thereby slash overhead costs. 

SMBs are actively using those networks and resources to reach millions of buyers worldwide, without every owning a brick-and-mortar location, or even hiring employees. 

Some estimates are that 90 percent or more of eBay sellers export to more than ten international markets. The transactions are made smoother and less risky by digital payment systems, like PayPal and Alipay. The average point of sale transaction using a foreign credit card was $169 across four emerging economies in 2013, while PayPal data from that same year suggests an average transaction sent to emerging economies of just $38. 

The industry is growing and so more entrants will strive to innovate, harvest, and harness the potential growth as quickly as possible. 

SMBs Evaded the “Corporate Entity” Debacle

As if those platforms weren’t enough, SMBs also have an established presence on social media and often perform better than larger companies. They appear more accessible and more human all while reaping the benefits of targeted marketing. Business owners gain access to huge stores of potential customers with built-in ways to reach them. 

Facebook, for example, is about to launch Instant Articles. It promises to revolutionize content delivery through machine learning and algorithmic technology: highly curated, highly targeted, highly purposeful content delivered to every user’s doorstep.

Facebook estimate that about 50 million SMBs operate its platform; a two-fold increase from 2013. To add some perspective, the World Bank estimated that there were 125 million micro-, small-, and medium-size businesses back in 2010. Facebook houses a large segment of those and new entrants that sprout everyday. 

SMBs Are Vehicles of Wealth

Uniquely, SMBs didn’t previously have as much influence on the global market, but now— thanks to digitalization—they are instrumental in the spread of wealth.

As is often the case, the numbers tell the tale.

In the United States, the share of exports by large multinational corporations plummeted from 84 percent in 1977 to 50 percent in 2013; in 2011, companies with less than 500 employees accounted for 97.8 percent of all identified US exporters and about 97.2 percent of all identified importers. To date, the number of US exporters with fewer than 50 employees has grown more rapidly than firms with 50 to 500 employees. 

Although that sounds positive, the picture is not so clear cut.

An analysis of export data for 16 Organization of Economic Co-Operation and Development countries shows mixed evidence of increased SMB participation. Between 2005 and 2012, the SMB share of total exports grew in ten of the countries, including the United States and France. But SMBs lost ground in exports in the remaining six countries (however, in Portugal and elsewhere, this was likely due to regulatory tightening). 

The increased accessibility and infrastructure available to nascent and legacy SMBs spread wealth to countries and people historically impoverished or isolated. In a sense, so long as you have an Internet connection, you can be part of the revolution. 

Native SMBs Wield Potent Advantages

The potential for connecting with a global body of clients, for using sophisticated technology by simply buying in, and the ease of transacting creates entrepreneurial openings for individuals unseen prior to 21st-century globalization.

This wave of change birthed a new kind of SMB.

Digital-native SMBs are digitally powered startups that attract a modern segment of buyers; they can hire talent inaccessible to traditional businesses; secure angel investors; and find eager mentors anywhere around the world. (See: Shark tank.)

The business books are rife with examples. Take your pick.

These digital-native startups are born with a global perspective. Most SMBs and businesses focused on tapping into the US market before the digital revolution. Now, digital-natives are born with an international perspective, an eye toward international cross-pollination. 

Whether you are an SMB or a large corporation, digital is not just a phenomenon, it is a mindset and a prudent business strategy. Participate or perish.

Thank you for reading. I have written hundreds of articles here on LinkedIn and am also a columnist for Forbes & HuffPost. If any of my articles help you and you'd like to consider nominating me for the LinkedIN Top Voices List then kindly fill out this short form. With immense gratitude.