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The Internet Challenge

In spite of the increasing attention on how the Internet is changing the business landscape, many small business owners are still struggling to understand its influence. But unlike the ceaseless blinking of the home VCR, the impact of the Internet cannot be ignored.

The Internet provides an all-encompassing vehicle to connect us to the information and things we want. Browse for your desires through millions of pages of shopping, communications, entertainment, and business opportunities. Unfortunately, consumers are parked at the tail end of the Internet's evolution and as these users arrive at any given website, a fierce battle to manipulate their purchasing habits is being pursued. The battle has barely begun.

The argument that the Internet is a fad or that it will never replace traditional commerce is redundant. It already has. Any invention that has the capacity to accelerate the delivery of products and services into the marketplace changes the economic and cultural landscape. The Industrial Revolution did it. The telephone did it. The automobile did it. The Internet will do it too. And because each technology builds on the momentum of its predecessor, the rate of acceleration intensifies. It is this intensification that many people find so disconcerting.

The Internet breeds new business processes in the same manner that the automobile gave birth to suburbia, shopping malls and salvage yards. Like parents fawning over their newborn infant, few inventors are able to envision the long-term consequences of their creations. Pioneering inventions, like human development, bring challenges and opportunities along their way to maturity. It is always risky to assume a rigid outcome. The Internet is still in its infancy—its formative years—and it's during this phase that the greatest influence can be exerted.

The Internet has both the power to create or destroy economic communities. The present momentum is focused on centralizing economic activity, in other words, building colossal portals that will attract consumer activity away from traditional Main Street retailers to these centralized hubs. Amazon.com is the foremost example of this trend. While use of this technology is a natural process of business evolution, the consequences on local economies are enormous.

Economic activity, whether rural, urban or national, is the organizing backbone of our community structure. Removing or reorganizing a community's economic activity has a consequential impact on the community's well being. Historic examples abound from the microeconomics of a town built on the gold rush fever to the macroeconomics of communism. In both extremes, external forces created internal disintegration.

The organizing efficiency and cost effectiveness of the Internet economy will have an incomprehensible impact on both the local and global economy. And because the circulation of money is a primary activity of our society, it is essential that we actively participate in how and where that money flows. So while the momentum of Internet technology may deter intelligent participation, by not participating we relinquish our responsibility to direct its flow into the hands of a few willing advocates.

Small business in particular needs to participate in its development. The Internet is a major threat to the well being of the small business community, the backbone of our economy. While some predict the demise of these traditional brick and mortar businesses, it is not the Internet that will bury them but rather their unwillingness to use Internet technology intelligently. For small businesses to profitably compete in e-commerce, it is essential that this segment of the economy is empowered and provided with the tools and resources to understand, strategize and position themselves as viable competitors.

Luke Vorstermans owns and manages a successful publishing and communications company and is the Editor of Business Dynamics magazine and content contributor to IR Design.

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