PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Small Business Week and the Role of U.S. Tech

By at 4 May, 2022, 11:08 am

by Raymond J. Keating –

During this National Small Business Week, elected officials and policymakers must also celebrate the drivers of entrepreneurship and small business growth this week, and that includes “big tech.”

Big Tech Started as Small Tech

It should be noted that the companies usually targeted by politicians and their appointees – i.e., Apple, Amazon.com, Facebook (or Meta Platforms), and Google (or Alphabet) – have taken the entrepreneurial journey from startups to wildly successful businesses. All of these enterprises are headquartered in the U.S., and serve as examples of amazing entrepreneurial success stories.

Therefore, it is appropriate to celebrate during Small Business Week the cases in which small businesses serve consumers well, and by doing so, become global leaders.

The Tech Sector Remains Dominated by Small Businesses

Even when hit with a barrage of political rhetoric about “Big Tech” and so-called monopolies or monopoly power, one should not ignore the market realities that no matter how large and successful a company becomes, it cannot afford to rest on its laurels.

Instead, especially in this dynamic, twenty-first century economy, large firms are competing against current, emerging and future competitors – both domestically and internationally. To get a flavor of this reality, check out some of the U.S. Census data on employer firms (2019 latest) by size in major tech sectors:

Big Tech’s Importance to the Startup Ecosystem

It’s important to take note of the results from the Small Business & Entrepreneurship Council’s survey of entrepreneurs who started businesses during the pandemic regarding how vital various technology tools and platforms were to their launch, and ongoing business operations. For example:

Key Sales Channels. When asked “What tools or sales channels do you currently use to sell your product or service?” 65 percent said they used physical stores, followed by 62 percent saying Facebook, 48 percent noting Instagram, and 47 percent saying an eCommerce website. This mix points to entrepreneurs understanding that the ideal mix is a physical and online presence.

Tech Played a Big Role in Decision to Launch. What about technology’s role in starting up the business? Well, 89 percent of these entrepreneurs agreed that social media was a major factor in launching their businesses; 87 percent said access to electronic payment options was important; 79 percent cited affordable online ads; 77 percent pointed to e-commerce sites and website builders; 73 percent noted access to “back office” services provided by technology platforms; and 56 percent highlighted access to online marketplaces like Amazon, e-Bay, Shopify, Etsy, and Newegg.

Reliance on Platforms for Operations. 68 percent of these pandemic entrepreneurs said they rely on established tech platforms, such as Google, Facebook, Apple, Amazon, Instagram, Microsoft and TikTok, either a great deal (38 percent) or quite a bit (30 percent), with another 22 percent saying somewhat. That tallies up to 90 percent.

Small Businesses Wary about Policy Attacks on Big Tech

Finally, small business owners largely understand that governmental attacks on “big business” usually have negative consequences for small firms. In SBE Council’s survey of entrepreneurs who started their firms up during the pandemic, when asked about government taking on “Big Tech,” 61 percent were worried about proposed regulations on tech companies resulting in negatives for those enterprises and for their own businesses.

As for those having such concerns:

● 58 percent were worried that such tech regulation would make it more expensive for them to access and retain customers

● 58 percent were worried that they would have to pay for services that are currently free to them

● 49 percent were concerned about disrupted communications with current and potential customers

● 47 percent were worried that it would be harder for customers to find their business

● 43 percent believed that customer acquisition would become more difficult.

Small Business Week means that nearly all politicians sing the praises of small businesses. And rightly so. For example, in his Proclamation on Small Business Week, President Joe Biden declared:

“For generations, small businesses across America have shaped and embodied our Nation’s entrepreneurial spirit and driven our economy forward.  Today, more than 32 million small businesses employ almost half of America’s workforce and represent the heart and soul of countless communities.  During National Small Business Week, we celebrate America’s small businesses and their enormous contributions to American life and prosperity.”

That’s great.

But President Biden and Members of Congress need to reverse course on a wide array of policy measures – including proposals and actions that vastly increase regulation on technology leaders, or aim to break up these firms, such as the such as the “American Innovation and Choice Online Act”  and the “Platform Competition and Opportunity Act”  – which in the end would directly or indirectly inflict real harm on America’s small businesses and our vibrant startup ecosystem.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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