Breaking U.S. Tech will Break Small Businesses

By at 25 April, 2022, 11:02 am


by Karen Kerrigan – 

Technology is a well-established driver of innovation, economic growth and small business competitiveness in the United States.  Fortunately, robust investment has continued to propel new innovations forward, which have provided entrepreneurs with opportunities to launch new businesses, develop new business models, and reach and serve consumer across the country and the world.

The pandemic fast-tracked consumer comfort with “all things digital.” And, while many activities will return to “normal” in a post-pandemic economy, there will be no turning back from the utilization of digital tools and conveniences that both consumers and small businesses have learned to fully embrace when we were all forced to live and operate in a touchless economy.

The Convergence of Online and Offline Commerce

In recent studies conducted by Deloitte on how small businesses are operating in this “new” environment, it is noted that consumers have learned to seamlessly navigate between the digital and brick-and-mortar realms when purchasing goods and services. In response, small businesses are leveraging technology and platforms to find and serve customers and to fully compliment the traditional brick-and-mortar experience (which consumers appear to be sticking with!)

This blended online-offline market is far different from the stagnant and noncompetitive one we hear being described by politicians and elected officials who are working to hyper-regulate sectors of our economy – especially technology – because of misplaced and irrational concerns about “market power.”

In fact, the market remains extraordinarily vibrant and competitive as individuals are starting new businesses in record numbers.

Competition and Startup Activity Remains Strong

This boom in entrepreneurship, which crosses all sectors and industries, began during the pandemic and continues unabated into 2022. According to the Census Bureau, 5.4 million people filed new business applications in 2021, an increase of 53% from 2019 and the most of any year on record. These pandemic startups are a bright spot for our economy, U.S. innovation and job creation. After all, new businesses are sorely needed to replenish the untold thousands that closed for good due to COVID government restrictions and shutdowns.

The Positive Influence of Technology and Platforms

Whether it is a startup, or a small business that has operated for many years, technology and online platforms are critical tools that have enabled survival, revenue growth, and entrepreneurial opportunities. For example, in a recent SBE Council survey of small business owners who started their businesses during the pandemic:

● 89% of respondents said that access to social media was a major factor – an important tool – that enabled the launch of their business.

● 79% reported that affordable online ads and access to online infrastructure support (logistics, shipping, accounting support, etc.) played an important role in starting the business.

● 77% said that access to e-commerce sites and website builders were vital tools that aided in the launch of the business.

Without access to technology and online tools, many of these new businesses would have never started. And once launched, the survey revealed that technology platforms and tools remain central to revenue generation and competitiveness.

For example: While 65% of startup founders report that their brick-and-mortar store is their top sales channel, they also report that technology platforms are key sales drivers: 62% said Facebook is a top sales channel, followed by Instagram (48%), the business’s ecommerce site (47%), Amazon (16%), and mobile units and places like farmer’s markets (15%). Pop-up stores, Walmart, eBay, Etsy and Shopify rounded out the list.

When it comes to the broad operations of their firms, 68% of entrepreneurs said they rely on established technology platforms such as Google, Facebook (Meta), Apple, Amazon, Instagram, Microsoft and Tik Tok to help run their small businesses.

In other words, big technology companies have served as a positive conduit for business growth and success.

Looming Policy Ideas and Actions that Threaten Market and Consumer Access

Again, these large tech companies are not viewed negatively, or as a problem to be “fixed” through government regulation, according to the views of entrepreneurs. Their chief concerns are the economy, inflation, access to capital, supply chain issues, and labor shortages. They want Congress and President Biden to focus on improving the tax system, fixing the inflationary mess, affordable health coverage, and advancing incentives to invest in startups like theirs.

Technology and tech platforms have made a positive impact on lowering barriers and creating access for entrepreneurs. Platforms have vastly lowered costs and opened markets, and government actions that erect new barriers (or re-establish old ones) will cause significant harm to small businesses and startups.

In fact, 61% of the business owners in our survey are quite worried about the advancement of government proposals and actions that aim to highly regulate or alter the business practices of big technology companies:

● 58% say these actions will make it more expensive to access and retain customers.

● 58% said the outcome of government actions will likely lead to making them pay for the services they currently use for free.

● 49% are concerned about the disruption of communications with customers, and potential customers.

● 47% said it will be harder for customers to find their business.

● 43% say new customer acquisition will become more difficult.

● 21% are concerned that the back-office support they receive – such as shipping and packaging – will be disrupted.

Indeed, the unintended consequences of various pieces of legislation and regulatory actions aimed at big technology companies will hit small businesses hard. That is why small business groups like SBE Council are urging caution and restraint when it comes to far-reaching tech legislation and why many groups want Congress and the Biden Administration to study the consequences of these policies further, and focus instead on the major pain points of small businesses.

We have reached a critical time for our economy, and President Biden and Congress must do all they can to support small businesses. That requires listening to our concerns and focusing on the serious issues that are undermining economic recovery. Policies that damage and destroy the technology tools and platforms that actually help small businesses compete and survive will only add to the woes that our economy – and our entrepreneurs – are facing.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council


News and Media Releases