The COVID-19 pandemic disrupted the business climate and elevated digital tools as a foundational pillar for operations, impacting both employers and stakeholders. It is important to understand the rise of new digital tools in order to navigate the challenges and opportunities in the evolving landscape of the digital economy. Indeed, the adoption of digital tools will impact the data, technology and innovation of small businesses for the next generation. To reach this digital future, small businesses will need access to technical assistance, cybersecurity, and upskilling opportunities.
Initially a disruptive force, the pandemic cleared the way for the swift adoption of technologies that were in existence, but not in widespread use accelerating a broader move towards e-commerce. A figure from the U.S. Chamber of Commerce states that “77% of small businesses say they would struggle to survive without access to their technology platforms”. The adoption of enhanced digital tools, such as messaging features, video capabilities and personalized ads, have allowed businesses to remain resilient and respond to changing market conditions. A
2020 report published by the Small Business Roundtable found that the initial COVID-19 shutdowns of businesses' physical locations and a change in consumer behavior led to businesses embracing digital tools. Evidently, entrepreneurs have been resilient in these challenging times–i.e., identifying creative ways to reach new and existing customers.
Navigating Challenges and Understanding Opportunities in the Digital Economy
In the aftermath of the COVID-19 pandemic, both the government and the private sector have mobilized resources to address the digital divide. While there are challenges to connecting all Americans to the digital landscape, there are specific policies that are already in place to get them there and new ones that are yet to be implemented. Last fall Congress passed a historic bipartisan infrastructure bill into law – Infrastructure Investment and Jobs Act – which allocated an unprecedented $65 billion “to ensure every American has access to reliable high-speed internet through historic investment in broadband infrastructure.” Moreover, the new law will assist Americans by lowering prices for internet service. As the effects of policies like this take shape in coming years, there will be further opportunities to increase digital access across local communities which in turn will help spur economic activity and create new opportunities for next generation businesses.
In the private sector, digital tools have helped small business owners grow their market and brand. Most of these small business owners were using social media platforms, which represent the most prevalent digital tool among U.S. small businesses. Reportedly, 34% of businesses increased their social media presence in 2020 alone. A recent
NextGen Chamber survey found that digital tools have become indispensable to the daily operations of small businesses - “an overwhelming majority of small business owners (88%) say technology helps them run their business better”.
The same survey also stated how much of an impact digital tools have within generations in the labor force - “millennial small business owners are more likely to consider themselves digitally savvy with the skills to adopt new technologies (83%) and to use digital tools to market and grow their brand (80%) than the average small business owner (75% and 73%, respectively)”. The importance of digital tools cannot be overstated in today’s business climate.
Unfortunately, today’s digital economy faces numerous challenges, including concerns around cyber security & access to technical assistance. According to the
Small Business Administration (SBA), cyber security is particularly critical to small businesses because they are frequent targets of cyber attacks and lack a security infrastructure to protect their data. The emergence of the environmental, social and governance (ESG) framework in the private sector has also underscored the importance of
cyber security as a “social pillar”, in light of
major security breaches in recent years that compromised consumer data.
The pandemic has only exacerbated the rise in cybercrime, so it is urgent for policymakers to address cyber security by protecting small businesses.
Access to technical assistance is an additional challenge in the digital economy. According to a
2021 Meta report, small business owners are facing barriers due to “preferences, a lack of tools and a lack of knowledge”. Furthermore, a
2020 congressional report from the SBA found that the majority of small businesses need technical assistance to access capital and other resources. In other words, businesses have done what they can to adapt to technological change, but have informal training on where and how to use digital tools.
These challenges are reflected on the labor side. According to the
National Skills Coalition, nearly one-third of all U.S. workers lack digital skills. People of color are
overrepresented among these workers with half of Black and Latino workers needing digital skills, and one-third of Asian American Pacific Islander. Thus, it is imperative for policymakers to address this challenge by increasing access to technical assistance and providing upskilling programs to meet the needs of our economy to ensure the next generation of business leaders have the digital infrastructure they need to succeed and provide businesses a tool for talent recruitment.
Building Towards the Digital Future
As the economy continues to shift towards a digital landscape we must be cognizant to not leave anyone behind as technology evolves. Small businesses also play a special role in innovation since they employ a sizable subset of U.S. workers that need upskilling such as high-tech workers. In 2018,
37% of high-tech workers worked for small businesses. Additionally, in a recent report on
The Rise of The Creator Economy, Richard Florida states there is a growing class of digital entrepreneurs emerging who are centered around the digital and creative landscape. This is now a vast and growing sector which as of 2020 had an estimated market size of over $100 billion globally, which includes 85 million participating American creators. Policy makers and stakeholders must work together to ensure small businesses have the help they need to access digital tools in order to grow and build the economy for the next generation. The future is here, and even as business owners adapt and innovate they are also looking for leadership to help them shape the economy of the future - one that is vibrant, equitable and prosperous for generations to come.
NextGen Chamber of Commerce | All Rights Reserved |
Created by Olive + Ash. Managed by Olive Street Design.