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A small business for everyone?

June 3, 2005

Mastercard and Warillow International have just published a research study on a new class of small business: the “Web-Driven Entrepreneur”. The study estimates that there are 5 million of these businesses in the United States and they represent 25% of all small businesses.

The study identified the segment by asking respondents to rate their Internet presence on a scale from 1 to 7 in terms of its importance for driving business results. Respondents who claimed their Internet presence was a five or higher were classified as “Web-Driven Entrepreneurs”, whereas those answering four or less were classified as “Traditional”.

“Web-Driven Entrepreneurs” are more likely to be women, have national customers, more likely to be on E-Bay and have a blog. They are also more ambitious than their traditional counterparts being more likely to access new domestic markets, move into international markets and introduce new products.

Two companies; Google and E-Bay have been fundamentally responsible for this new market by creating dynamic access points for these entrepreneurs. These companies provide small businesses with instant scalability and the chance to compete with their larger competitors, by giving them the opportunity to advertise and sell to massive markets.

Years back, success in small business was about having a catchy phone number and an ad in the Yellow Pages. That’s now been replaced by Google search terms and if you sell goods, a store in E-Bay. The web has truly flattened the market and this is only going to get bigger as small merchants throughout the world plug into this new massive global marketplace.

To compete more aggressively, small businesses will turn to the web to buy consolidated services like health insurance and form buying groups for goods.

Waiting to swoop in on this business opportunity will be financial membership organizations like American Express, Visa and Mastercard and even E-Bay, Google and Yahoo who will use it to expand their service offerings.

The web already allows us all to become entrepreneurs for our own personal brand, managing our brand through blogs and social networking. Perhaps in the near future, we will want to monetize some of our ideas and become a part-time small business. The opportunity to treat small business as plug and play, without the worry or risk of long-term commitment, seems a likely possibility for all of us.

The Pez MP3 player story is a great example of this new reality. A man with no engineering skills, no design skills, no manufacturing plant, but one great idea, can bring his idea to life because of the power of the network, pretty amazing.

The idea that everyone can be an entrepreneur is a powerful one. For banks, web hosting companies, insurance companies, lawyers and a yet to be dermined class of middlemen, this could be huge. The secret will be to understand that this new world will not be about segmenting people into neat boxes, those who are small businesses and those who are not.

Instead, it will be about being sensitive enough to identfy any individual with potential entrepreneurial tendencies and providing with them with the flexiblity and tools to act on them.

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