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How Cloud Computing Shapes Small Businesses

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Remember those days when operating a small business simply meant owning a moderate-sized shop or store with a handful of employees? Not anymore.

The rapid progress of information technology in modern times has transformed our understanding of business as a whole and, more specifically, expanded the definition of a small business. Although it began as a way of improving efficiency by providing better ways of doing business, IT has since reshaped business itself. With the ever-growing power and reach of the internet, there is a new force that is redefining the small business: cloud computing.

Cloud computing is a relatively recent term used generally to indicate the use of hosted Internet services. The Internet has been around for a while, but the use of its services as a utility – like electricity and telephones – is more recent. Many new powerful platforms allow businesses to consume the Internet as a resources, as opposed to developing their own computing infrastructure, which may be impractical for smaller organizations.

Factors Behind the Rise of the Cloud

The cloud isn’t just a newfangled way of doing business, it’s a response to the many forces driving the global economy today. As unemployment rates rise and economic uncertainty increases, people have more incentives to create small business ventures instead of relying on possibility that they will find employment in the near future. Also, cloud computing hasimproved the aspects of starting a business that might discourage entrepreneurs, such as start-up costs and logistics. The result is that more and more people find the prospect of owning a small business more attractive than having a job that they don’t like or may not have in the near future.

As the use of cloud computing in small businesses has taken off, the necessary and infrastructure and platforms have developed dramatically. Owners today have a multitude of online tools at their disposal, for tasks ranging from writing a simple document to keeping detailed accounting records. Online resources are readily available at any place with an internet connection, which makes it much easier to maintain and update them. They also open the door to collaboration and greatly expand the pool of collaborators that a small business can draw from. For example, a business owner can now hire a skilled person on a website like Elance or oDesk who can work from several thousands of miles away from the physical location of the business.

The cloud also enables you to manage your business from the comfort of your own home, meaning that showing up at an office on the other side of the town every day may not be a necessity. This may be particularly appealing to certain demographics, such as stay-at-home mothers and senior citizens, who might otherwise have been discouraged by the daily need for travel.

The New Small Business

In the not-so-distant past, access to certain services depended on the size of your business. The costs for an advertising campaign, for instance, may have been prohibitive for a small business but reasonable for a large company which could then use it to reach more customers. Cloud computing levels the playing field by giving small businesses access to services once available exclusively to larger organizations. Business of any size can use Google AdWords these days.

For entrepreneurs, the first step is often the hardest. But the cloud makes it cheaper and easier to start a business and, once it’s ready, to scale it as well. Building an online presence takes effort, but it is free of many of the problems of doing it in real life. Imagine the hassle of finding a space to rent for your office. You need a certain size, a certain maximum price and a proper location. In the cloud, problems such as this become immaterial.

Another way that cloud computing enhances the capabilities of a business is dealing with customers. Not only is it easier to acquire customers, but customer support is also greatly improved. The cloud allows businesses to create support material which customers can then access from anywhere and at any time.

Faces of the New Economy

The cloud is changing small businesses on every level. Here are some examples of how:

  • Plug-in: Instead of starting a new service from scratch and dealing with all the challenges that come with it, wouldn’t it be nice if you could make use of one already provided by another firm? Like web-based software these days, these “plug-in” services would give you a more efficient way of performing a particular function, compared to developing you own in-house solution.
  • Diversified income: Having multiple sources of income might seem like a privilege for the big companies, but the game is changing. Smaller businesses can now expand into various activities and open up multiple income streams, using them to leverage each other. This reduces reliance on a single source and creates a more stable business.
  • Shared resources: The cloud makes it much easier for firms to pool their resources and experience, leading to a win-win situation for all. Not only does this lead to greater productivity, but also makes the business more flexible and resilient. By creating a shared pool of talent that the partners can tap into, it minimizes the overall effect of individual losses.
  • Level playing field:Nowadays it’s not uncommon to find small businesses which are in competition with large firms for the same group of customers and the same services. This is just another way that the cloud is opening up avenues that were previously sealed off for small business owners.

The Future

Intuit’s survey on the Future of Small Businesses shows, as of 2014, 37% of small business were fully adapted to the cloud and therefore reaping the full benefits of it. That number is predicted to go up to 78% by 2020. This is hardly surprising given the many benefits outlined above. The cloud is here to stay, and the future of small business depends on it.