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Cornell Student Articles on Topical Affairs

Doing Businesses in the Digital Age

The Internet has played a huge role in the way the fabric of our society has evolved. It is not surprising then, that businesses across the world have seen its influence affecting them in a big way. On one end of the spectrum, large business conglomerates, some of the most valuable organisations in the world, are built around technology and the Internet. On the other end are what many people refer to as the backbone of an economy. The small businesses.

The effect that the internet has had on small businesses is polarizing. Depending on how you look at it, it has made it easier for an entrepreneur to set up a small business. The large initial capital that was almost mandatory in the past, is no longer a necessity. A retail business no longer needs to incur the capital cost of setting up a physical retail space. Digital service providers do not need to set up large facilities to service their customers. With the advent of social media, the widely accepted idea is that it does not take a mammoth advertising budget to create some awareness for a business. The marketing for a business is no longer dependent exclusively on expensive mass media channels. Just two decades ago, small businesses would find it difficult to overcome such obstacles.

The flip side of the argument, is the internet has made it easier for larger corporations to smother small businesses by sheer weight of their scale. The connectivity the internet has provided makes it easier for the big players to integrate into entire markets. With the highly scalable business models they are built on, it becomes much easier for them to quickly capture massive market share. This allows them to marginalize the much smaller businesses and over time make it impossible for them to compete.

What we should keep in mind however, is that the truth lies somewhere in between. Like it has been over the years, setting up a business is not a guarantee for any amount of success. The risk remains as high today as it has been at any other point in history. What has changed are the components that make up a small business.

Almost without exception, any consumer facing business today has to have a digital presence. For small businesses this digital footprint is more important than ever. It is the identity of the business. Each year, more and more tools are available to business owners, allowing them to tell their customers compelling stories that differentiate them from the competition. Today, business owners have the ability to build out their own personal brands that they can carry forward into their businesses. A few years ago, this was an expensive proposition that very few small businesses could afford.

With businesses built entirely in the digital domain, their assets look very different from what they did over the years. A domain name to host the website has become key to the image the business creates. SEO and social media marketing have become skill sets that most businesses can not sustain themselves without. The website that is at the heart of many digital businesses is often the most valuable asset for such organizations.

Protecting these digital assets, in this day and age is a very different proposition. At some amount of scale, businesses have to look at website protection and set up firewalls to ward of digital threats. The security guard outside the warehouse and safe in the office have been replaced by a solid firewall around the host network.

The technology boom we have seen in the recent past has created a very unique phenomenon. It has changed how we look at a successful business. It has also allowed small businesses to grow, unnaturally quickly into large global organizations. For the founders that saw success in this phase, the returns were immense.

There was a time where the only way to asses the success of a business was its ability to turn a profit. Yet technology based businesses have been assigned incredibly high values in spite of running large losses. Until today, large organisations such as Uber and Twitter continue to post losses. The value assigned to these businesses however are not indicative of their inability to churn out cash. This indicates a very defined shift in the factors that make a business valuable. The ability to generate traction, a large number of users or collect large volumes of data have all become factors that have outweighed the purely profit motive that governed businesses in the past.

Startup culture, a by product of the digital age, is beginning to become the face of the emerging small business. Only a few years ago this mantle was held by the family owned and run businesses that formed the majority of small businesses.

The small business today looks very different from the one just a few years ago, still one thing remains constant. At their heart is an entrepreneur, driven by a spirit and set of ethos committed to make their future better than their past each day they wake up.

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