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in retail, for example, traditionally
relied on a prominent store on a
town’s main street, where the
retailer could attract the largest
number of customers through the
door. Companies often depended
on a large sales force, who visited
customers to build relationships.
Businesses held significant
amounts of stock in warehouses,
and had a large office staff to take
phone calls and handle paperwork.
That has all changed.
Consumers can now find retailers
large or small via the Internet from a
laptop, smartphone, or tablet. The
physical scale of a business no longer
correlates with success. Many
businesses no longer need large
offices. Paperwork has diminished,
while online communication—email,
instant messaging, and social media
—allows sole-traders and employed
people alike to work remotely, from
home, anywhere in the world.
Large companies used to be
more competitive than small
companies because they had better
economies of scale (the cost
advantages that enterprises obtain
due to size). When computers were
first developed, this continued to be
true, because large, costly servers
were required for file storage.
Today, however, the Internet is free
and technology prices are relatively
inexpensive. Cloud computing—
whereby organizations share virtual
infrastructure, software, and
storage —has enabled small
businesses to have access to the
power of integrated networks and
computing at a very low cost, and
with no use of physical space.
Just as scale is no barrier to
success, neither is geography.
A small business can now reach
customers all over the world just
as effectively as a large one. It is
possible to live on one side of the
globe and sell items from an entirely
different continent. The introduction
of PayPal in 2000 allowed simple
payment and money transfers in a
wide range of currencies via the
Internet, furthering opportunities
for small companies to operate as
global e-commerce businesses.Competing with giants
With an increasing choice of goods
and services available online for
consumers, small businesses must
offer something more than the giants
in order to compete. Price is critical
because consumers can easily
compare prices online. But it is not
the only factor that affects an onlineSMALL IS BEAUTIFUL
In the digital, networked economy,
people can work anywhere, at any
time. This shift in working habits
is changing the face of business
environments and staff distribution.purchase; cost and speed of delivery
are critical too. Free shipping and
free returns are attractive incentives
to purchase. Time of delivery is also
important: retailers who can offer
one-hour time slots and deliver
beyond the traditional working day
gain a competitive edge. Customer
service is more important than ever.Feedback is king
Whatever the goods being sold,
they must be of the quality stated,
because feedback on the Internet
can have a powerful effect on the
market. For hotels and restaurants,
feedback and ratings by customers
are now the norm, and many
consumers base their purchasing
decisions on other people’s
comments. A well-run, small,
family-owned hotel, which focuses
on excellent service and delighting
its guests, can build a reputation as
the number one place to stay in a
particular town—ahead of a big
chain hotel—because of review
websites such as Trip Advisor.The Internet is really
about highly specialized
information, highly
specialized targeting.
Eric Schmidt
US former CEO of Google
(1955 –)