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How IT can help Small Businesses to Survive the Economic Crisis

Call it what you will. As the U.S. economy goes deeper into recession, small-business owners are finding it just as hard as larger businesses [1] to figure out how to survive. What’s more, America’s small and medium businesses are just as, if not more, important to our economy. Small businesses, which by definition employ less than 500 people, account for half of all of our economic output! And most small businesses actually have 20 employees or less.

That economic conditions are getting worse is not new news. The National Federation of Independent Business [2] polled small firms (with less than 250 employees) and found that more than three-quarters see business activity as getting weaker or, at best, not changing much. [3]

Since we’re not likely to see any of the 700 billion dollars allocated by congress for the “rescue” plan, what can small business owners do? Well, to some extent they’re already doing it. They report spending more time at their business, with more oversight of operations and more hands-on decision making. Two-thirds are managing cash flows more carefully. More than half say they are watching inventories more closely than they were at this time last year. The only good news is that the great majority—70 percent—has not yet had to lay off employees. So far, then, these tactical actions—a closer and more personal degree of on-site involvement, more careful management of income, expenses and inventory, and keeping a careful eye on pricing—have helped. Even so, tactics alone have never won a major battle, and we may be going into the most difficult economic fight for survival that’s been seen in almost a hundred years! What’s needed if a small business is to survive is a sound strategy, along with effective tactical maneuvers.

It seems to me that a basic strategy that small businesses everywhere need to adopt centers on communication, specifically, communication made possible by new technology. There are two fronts, here: internal and external. I’ll explain what I mean with regard to each.

Technological strategy for internal communication - The economic crisis demands increased efficiency and productivity, as well as careful monitoring and, if at all possible, reductions in capital expenditures. So it may sound counter intuitive for me to say that one of the most important actions small businesses can take is to invest in updated and upgraded information technology. Specifically, this means unified IT communications. [4]

Unified communications offers:

• Note from editor Ayman El Tarabishy is the Executive Director of the International Council for Small Business (ICSB). [5] He brings perspective on not just what goes on with small businesses here in the U.S. but in member groups around the world.

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