Technology is essential to future of small businesses across America

Technology is essential to future of small businesses across America
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Technology has changed the global economy and our business landscape several times over, and we're in the midst of yet another fundamental shift. Advances in artificial intelligence and the decreasing cost of computing power promise to change the way people work and communicate over the next century. Just as the industrial revolution empowered entrepreneurs to build iconic enterprises like Ford and Black & Decker, there are already signs of how the digital revolution is helping Main Street take a competitive edge.

Small and medium-sized businesses power American commerce, comprising 99 percent of firms in the country. By hiring employees, promoting workforce diversity, and fostering increased participation in the global marketplace, these business owners strengthen local communities as well as the U.S. economy. Increasingly, these entrepreneurs count on technology to start and scale their companies.

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We know that technology supports millions of small and medium-sized businesses in the United States. Just think about how Amazon enables online sales, or consider all the digital shopfronts that have popped up on platforms like Facebook and eBay. Everything from the way consumers find and purchase products and services to the way small businesses market and ship their wares continues to be shaken up by new technologies. With each new innovation, small and medium-sized business owners gain improved tools for running their businesses and engaging with potential customers.

However, the transition to a digital economy is happening so rapidly that we are still just beginning to understand the extent to which technology is transforming the playing field for the small business sector. Since we already know that more than 70 million small businesses around the world actively use Facebook, we used this as a jumping off point to better understand the role of digital platforms in the development, and the future, of U.S. small businesses.

To gain more answers, the Chamber Technology Engagement Center, a policy hub at the U.S. Chamber of Commerce, recently partnered with Morning Consult to poll 1,000 small and medium-sized businesses, or those with fewer than 500 employees. Here is just a sample of what we learned about small and medium-sized businesses generally as well as how they are using technology to fuel growth.

There are 28 million small businesses that account for two-thirds of new jobs and generate more than half of the nation’s economic output, according to the U.S. Small Business Administration. Our poll shows that nearly half of small and medium-sized businesses that use Facebook, Whats App, and Instagram have been able to hire more people due to increased demand for their product. An average of 43 percent of the small and medium-sized businesses surveyed also use digital platforms to recruit and retain employees.

Technology continues to break down geographic barriers in myriad ways, and that certainly holds true for Main Street businesses. Through e-commerce and social media platforms, small and medium-sized businesses outside major metropolitan areas can now reach customers well beyond their hometowns or even their home states, and that’s a particularly big boost for entrepreneurs in rural areas.

Not surprisingly, half or more of the small and medium-sized business leaders we surveyed in 14 predominantly rural states say that Facebook is an essential tool for their businesses. For small and medium-sized businesses based in rural areas, this capacity allows them the best of both worlds. Their locations often offer a lower cost of doing business and proximity to cherished communities, yet these companies can still reach customers around the world.

Thanks to technology, small and medium-sized businesses are able to participate in the global marketplace with much greater ease. This includes marketing, selling, and exporting their products to customers abroad. Despite their size, small companies have an outsized role in global trade, accounting for 98 percent of U.S. exporters and about one-third of merchandise exports. For example, more than 120,000 American small and medium-sized businesses export to Canada or Mexico. Of the small companies surveyed, nearly eight out of 10 sell goods or services to more than one country.

Business owners need technology to run their companies, whether they are small or large. As customers move online to make purchases and seek out contracts for services, small and medium-sized businesses have the opportunity to build new relationships and market share. Our preliminary research findings show that technology helps small and medium businesses support local economies across the United States, create jobs, and generate new opportunities for innovation and entrepreneurship.

Bringing a clearer understanding to the role technology plays in the growth and development of the small business economy is essential, not only for nurturing and sustaining economic health in the midst of today’s ongoing digital transformation, but for ensuring that the millions of Americans touched by small business benefit from the opportunities and economic security it offers for years and even decades to come.

Tim Day is senior vice president of the Chamber Technology Engagement Center at the U.S. Chamber of Commerce.