The Impact of Information Technology on Small Business
Today, small businesses greatly rely on information technology to operate on a daily basis and this is mainly because information technology provides a wide-range of tools to entrepreneurs’ in order to help them guide their new-companies through startup and growth stages. In fact, Small-business accounting, marketing and communication sections have been revolutionized by advances in technology thus enabling startups to compete with large corporations on the same market. All in all, information technology has the potential of affecting small businesses in both positive and negative ways depending on the goals a business has put into place, the products they are selling and how well the employees adapt to the new technologies.
Positive Impacts of Information Technology on Small Businesses:
- Improved communication within small-businesses: there are many internet services that have improved communication between small business owners and their employees’ in-order to increase on efficiency and effectiveness at work. For example, Emails and instant-messenger tools have made it much easier to communicate and share information within small-businesses.
- Improved project Management: Web-based project management programs like Basecamp and Zoho Projects offer small-businesses with a web-based approach to keeping track of projects, tracking time, updating team-members and clients, delegating tasks and sharing of documents in real-time. So, this gives small-businesses a chance of having an up-to-date information system that can be used regardless of a person’s location.
- Easy communication between customers and small-businesses: with rise of different technologies such as social-media platforms, automated chatting softwares, Emails and a lot more, small businesses can instantly connect or share-information and even get feedback from their customers and this greatly improves on customer relationships within the company.
- It provides a Flexible work-environment: technology actually gives small business owners and their employees an option to work in the office, from home or even on the road. This has given small-business owners a chance to hire talent from all-over the world in order to gain a competitive-advantage in the global market.
- It allows small-businesses to create online-stores: Today, there are many technological softwares enabling small-businesses to set-up online-stores rather than investing in costly storefronts. In fact, most consumers are migrating to online-shopping in-order to find everything they want from gifts to groceries and this actually gives small-businesses an opportunity to market to market their services and products. Additionally, even storefronts can create online-stores to expand on their visibility and reach target markets beyond their surrounding communities.
- Improved accounting management: Today, there are very many modern accounting software packages designed to simplify the process of setting-up accounts and managing daily transactions. In fact, managing accounts with a small-business accounting package like QuickBooks and Microsoft-Money helps to eliminate the need for hiring full-time or third-party accountants thus saving startups a lot of money. Additionally, these accounting-systems also assist managers in creating informative-reports and financial-statements in-order to improve on decision-making effectiveness.
- Improved Advertisement by small-business: The internet also offers various platforms that allow small-businesses to promote their products and services to online-shoppers. For example, web marketing tools like Google-Adwords and Facebook-Advertisement will allow small-businesses to reach a wider audience online at an affordable price thus enabling such businesses to grow at a faster rate. Additionally, these advertising-platforms enable several small-businesses to share advertising-space online through banners and traffic-swaps.
- Reduced costs of production: With rise of different technologies today, small-businesses no-longer have to hire a lot of employees to accomplish a certain task. In fact, there are several automated machines on the market that can allow small businesses to produce goods at maximum-levels with less labor and there are many communication-softwares that enable companies to handle different clients at the same time thus eliminating the need for a call-center section.
Negative Impacts of Information Technology on Small Businesses:
- Increased Startup Costs: Although information-technology offers numerous advantages to small-businesses, it comes with a drawback of increased startup-expenses for new-businesses. In fact, every new-business that wants to use information-technology requires computer workstations and a network infrastructure before it begin operating. However, some small-business owners and their employees may consider using their own PCs and cell-phones during the startup-phase until they attain full-growth.
- Employee Training Costs: When small-businesses implement new-technologies into their processes, they will have to provide training to their new and old employees which may tend to be a bit expensive for a growing company. In fact, some old-employees may resist the new technologies or experience a low-learning rate and this can temporarily reduce on the productivity of the company.
- Increased Competition: Technology has led to an increase in competition to many areas of business because of the many new-businesses joining the internet on a daily. In fact, today small-business can offer its products and services online through different methods and this actually increases on the number of new-merchants to the global online-marketplace thus creating a challenge of retaining customers or an increased risk of being driven-out of business by existing large-businesses.
- Decreased productivity of employees at work: Today, some employees spend a lot of their working-time replying to personal mails, chatting, watching online videos and web-surfing leading to a decrease in productivity at work. So, this can greatly affect small-businesses in the way they provide services to customer leading a decrease in sales. In fact, small-businesses with unproductive employees tend to fail before attaining full-growth and this has become very common today because of the many entertainment services that the internet provides that can even be controlled by business-owners.